Royal Assent

The following Acts were given Royal Assent:
	London Olympic Games and Paralympic Games (Amendment) Act, Terrorism Prevention and Investigation Measures Act, Public Bodies Act, Charities Act.

Justice: Pre-trial Publicity
	 — 
	Question

Baroness Quin: To ask Her Majesty's Government whether they are considering legislation to strengthen measures against pre-trial publicity which may prejudice a fair trial or undermine the principle of the presumption of innocence.

Lord McNally: My Lords, there are no current plans to legislate. The Government referred the subject to the Law Commission in the summer and we will study with interest its conclusions in due course.

Baroness Quin: My Lords, this Question was prompted by the case of Mr Jefferies in particular. He recently gave evidence to the Leveson inquiry and described how, although innocent of any crime, he was vilified in the press to such an extent that he was in fear of his life. Any of us as citizens could imagine ourselves being caught in such circumstances simply by being linked through coincidence or circumstance to a crime. Although I welcome the fact that the Attorney-General has shown himself willing to prosecute in such cases, will the Government none the less look at amending, for example, the Contempt of Court Act so that action can be taken at an earlier stage rather than when havoc has already been wrought on innocent victims' lives?

Noble Lords: Hear, hear!

Lord McNally: My Lords, I think that the response to the noble Baroness's question reflects concern in all parts of the House about this matter. There are a number of problems with the operation of the contempt laws which are set out in detail in the Law Commission's Eleventh Programme. Since 1981, when the Contempt of Court Act was enacted, the world of publishing has evolved considerably in terms of technology and the structure of the media, and the internet is now a significant influence in this area. That is why we have referred the matter to the Law Commission. In no sense should this be taken as our kicking it into the long grass or as the Attorney-General not appreciating the real public concern about these matters.

Lord Thomas of Gresford: My Lords, some in the press take a gamble with pre-trial publicity that the suspect will be charged and convicted, after which there will, of course, be no proceedings. In the McCann and Jefferies cases, they then became completely contrite and settled the claims without any question. Should they not lose a day's edition as a result of circumstances as bad as that? Can we not have measures that will really bite on the press when it goes astray?

Lord McNally: My Lords, my noble friend's idea is an interesting one. I understand-just a thought-that an editor has not been sent to prison for contempt since 1948. The Attorney-General, who has been alive to this matter, said in a lecture at City University on 1 December that, in his opinion, the press has been pushing at the boundaries and in a sense has subtly been seeking guidance on what is acceptable. I hope that the Attorney-General's action has given it suitable guidance that we take this matter very seriously.

Lord Morris of Aberavon: My Lords, while I am confident that the Attorney-General will keep a watchful eye on this issue and commence proceedings, as he has indicated, where necessary-as I had to do two or three times-I also wonder whether standards have deteriorated. Have there been discussions-should there be discussions-with the press generally to try to avoid prejudice long before contempt proceedings have to be contemplated?

Lord McNally: My Lords, I agree with the noble and learned former Attorney-General. At the City University lecture to which I referred, the Attorney-General said that it appeared to him that,
	"the press had lost any sense of internal constraint and felt able, indeed entitled, to print what they wished, shielded by the right of 'freedom of expression' without any of the concomitant responsibilities".
	We are indeed making it clear to newspapers that the law exists in this area. As he has already demonstrated, the Attorney-General is willing to follow the example of his predecessor and take action under that law.

Lord Cormack: My Lords, it is not only the press which is to blame here; the police made no secret of the fact that they had arrested Mr Jefferies on suspicion of murder. Should there not be a prohibition on the police announcing that sort of arrest until someone is actually charged with an offence?

Lord McNally: Again, that is very sensible. One of the things that has come out of recent revelations is a perhaps unhealthy linkage between the press and the police in high-profile cases. The police themselves should be very concerned to observe all proprieties when dealing with such serious matters.

Lord Pannick: Will the Minister bear in mind that the Contempt of Court Act 1981 liberalised the law precisely because the previous law restricted newspapers from publicising matters of public interest, in particular scandals such as the thalidomide affair?

Lord McNally: My Lords, we are aware of that, and we are very concerned to make sure that we get the balance right. However, where the press's desire to sensationalise actually jeopardises a case, either by prejudicing the case against an innocent man or, almost as bad, so prejudicing a case that someone who is guilty has to be released, it cannot be in the interests of justice.

Lord Richard: My Lords, the noble Lord has told us what the Government intend to do and I think that they are wise to involve the Law Commission in this matter. However, he will know, as we all do, that Parliament's record in implementing the Law Commission's reports is not exactly very good-it is not a speedy process. Will the noble Lord note, certainly from the mood of the House this afternoon, that if the Law Commission reports on this, the feeling would be that it is not a report that can hang around for two, three or four years before Parliament looks at it? The matter will need some urgency once they have had a look at it.

Lord McNally: I thank the noble Lord for his comments. I am the Minister responsible for liaison with the Law Commission. One of the things I said to Mr Justice Munby, the retiring head of the Law Commission, is that during my stewardship I would hope that we could remedy some of the faults that he indicated and that, certainly on this point, we would approach any Law Commission report with a due sense of urgency.

Baroness O'Neill of Bengarve: Does the Minister agree that one of the problems is that the media have confused their right of freedom of expression, which in the European convention contains many legitimate restrictions, with the rights of self-expression which we may accord to individuals without damage to others?

Lord McNally: I agree, but also the law is very clear. I tend to agree with the Attorney-General that the media have been pushing the envelope of the law to an extreme. That is why he is taking action.

Armed Forces: Housing
	 — 
	Question

Lord Dubs: To ask Her Majesty's Government what is their assessment of the quality and standard of housing for the families of members of the armed forces.

Lord Wallace of Saltaire: My Lords, the majority of service family accommodation is already of a very good standard. In the United Kingdom, some 96 per cent of homes-that is 46,000 out of 49,000 homes-are at the top two standards out of four standards for condition, with more due to be upgraded to the top standards in this financial year. The MOD continues to target funding on the most pressing accommodation issues.

Lord Dubs: My Lords, I understand what the Minister says, but does he not agree that to bring all housing for families of servicemen up to the right standard is going to take about 20 years and that this is not good enough when families will come back from Germany and when our troops in Afghanistan are entitled to believe that all their families are adequately housed?

Lord Wallace of Saltaire: My Lords, I do not agree with that. Under the previous Government's programme, the target for 2020 was for all service families' accommodation to be at standard 1 level. I think they were confident that they would hit that target. As the noble Lord knows, we have now had to put into the advance budget of the MOD a pause in major upgrades for three years from 2013, which may make the 2020 target hard to hit. Minor upgrades, however, will continue. The vast majority of service accommodation will continue to be of a very high level.

Baroness Sharples: Will my noble friend tell us whether Wellington barracks, which I have visited twice in recent years, has now been brought up to scratch?

Lord Wallace of Saltaire: My Lords, I do not have that information. I promise to write to the noble Baroness.

Lord Dannatt: My Lords, is it not a great disappointment that over the past few years when extra funds were found for service family accommodation there now has to be a pause and that expectations which were raised are now going to be lowered? I accept that there is not the money for all the things that we would like to do, but when our soldiers, sailors, marines and airmen are heavily committed, it is a great disappointment not to be able to refurbish their houses to the timescale previously promised. Would the Minister not agree?

Lord Wallace of Saltaire: My Lords, we are talking about around 1,000 houses. We very much hope that serious problems will not arise during this three-year pause. We are doing everything that we can to avoid that problem. As the noble Lord will know, one in eight service houses turns over every year, because there is a considerable churn in Army housing in particular. That requires a constant programme of minor refurbishment, which will of course continue.

Lord Palmer of Childs Hill: During the passage of the Armed Forces Bill, I raised the dire state of forces housing. I suggested that we look to fill the gap by the greater use of housing associations in garrison towns. I did not really get an answer, but the Minister did at that time say that the upgrades since May 2010 of service housing personnel was 900 units. Can the Minister-bearing in mind his previous response about 2013-give a number of the houses that will be upgraded by the end of 2012?

Lord Wallace of Saltaire: My Lords, I understand that there will be another 500 to 800 houses to be upgraded next year. I add that not all service families are living in service family accommodation; part of the intention of the new employment model currently under negotiation is that fewer service families will have to move as regularly as before. More will therefore be able to invest in their own homes. I was, indeed, asking some of the doorkeepers about their service accommodation and service life, and I was interested to hear how many of them had loans through the services to buy their own houses.

Lord Touhig: My Lords, no sensible person would move into a house that they had not first looked at, yet for many service families the first time they see the accommodation that they have been allocated is the day they move in. Does the Minister agree that this is not the right way in which to treat our servicemen and their families? If he does, what are the Government doing about it?

Lord Wallace of Saltaire: My Lords, as the noble Lord will know, part of the problem has been the sheer number of moves that service families have been making, particularly in the Army. With the return of our forces from Germany and the changes in the forces structures that we are implementing, we hope that there will be less frequent and fewer rapid moves, which would enable service families to be consulted a good deal more widely.

Baroness Finlay of Llandaff: Can the Minister tell us how many of the service family houses are fitted with carbon monoxide alarms, given the danger of carbon monoxide poisoning, particularly in poorly maintained buildings? We know that some of these buildings are poorly maintained. If the family move in and put the heating straight on, that may be the night when they get carbon monoxide poisoning.

Lord Wallace of Saltaire: That is a very good question, and I will of course have to write to the noble Baroness about that. I do not have the accurate, detailed information.

Lord Pearson of Rannoch: My Lords-

Lord Brooke of Sutton Mandeville: My Lords, may I remark to my noble friend that my noble friend Lady Sharples asked a question about the Wellington barracks when we were in opposition? It has clearly therefore appeared on the screen of the Ministry of Defence. If the first Duke of Wellington was alive today, I shudder to think what he would have said if it had disappeared from the screen during his lifetime.

Lord Wallace of Saltaire: I shudder to think what service accommodation was like when the Duke of Wellington was a general.

Lord West of Spithead: My Lords, in furtherance of what the Minister said about people owning their own accommodation, it became very clear to us at the MoD that the benefits of people having their own homes were huge. Are the Government now ensuring that there are mechanisms in place to make it easier for our people to own their own homes if they need to, rather than investing in married quarters, which can be awfully expensive in comparison?

Lord Wallace of Saltaire: My Lords, I visited Sandhurst the other week, and noted that one of the first things that they had done there was to build houses for some of the staff, which they could buy. It is very much part of what is intended under the new employment model that this will make it easier for service staff to buy their own houses.

Business: Ethical Values
	 — 
	Question

Lord Haskel: To ask Her Majesty's Government whether their plan for growth includes steps to encourage shared ethical values and long-term stewardship in United Kingdom businesses.

Baroness Wilcox: My Lords, the Chancellor's Autumn Statement reinforced the Government's commitment to deficit reduction and fairness, to rebalancing the economy away from one built on debt towards long-term sustainable growth for the safety and happiness of our people.

Lord Haskel: My Lords, last month the financial services sector was in trouble for mis-selling insurance to pensioners. Yesterday, your Lordships debated the excessive charges for payday loans. These are but the latest in a long list of ethical and moral failings of an industry that the Prime Minister says must be protected at the expense of Britain's wider industrial interests. In view of this, will the Minister now insist that the governance and management of these financial businesses be linked to the values of the rest of us-for instance, by adopting the City Values Forum?

Baroness Wilcox: I have had exchanges with the noble Lord on a couple of the issues that he has referred to today, so I know how fresh this is in his mind. The Prime Minister has spoken about a new understanding between business and government, with Governments committing to pro-enterprise and business-friendly practices. But more than anything, he believes that Britain's most successful businesses are those that invest in their people, communities and environment.
	Every Business Commits is a new initiative taking place under our Government, to see whether we can get businesses to make a significant impact by improving skills and jobs, supporting communities and small and medium-sized enterprises and improving the quality of life and well-being for our people.

The Lord Bishop of Oxford: My Lords, economic growth must be for some people an end in itself but for many others it is actually a means to an end: a larger end of human happiness, the quality of life and a fairer society. How does the Minister propose that the Government will try to co-ordinate an approach to economic growth, which is important, that also contributes to a richer, more holistic goal of human and social well-being?

Baroness Wilcox: Of course I agree with the right reverend Prelate the Bishop of Oxford that growth is not an intrinsic goal but a pursuit in order to achieve other ends. In November a year ago, the Prime Minister asked the Office for National Statistics to devise a new way of measuring well-being in Britain. His goal, he said, was to start measuring our progress as a country, not just by how our economy is growing but by how our lives were improving; not just by our standard of living but by our quality of life. The well-being factors that it identified were: jobs, health and well-being and the environment. They mirror closely our priorities under Every Business Commits, the new initiative which I hope that the right reverend Prelate will follow carefully and advise me, if he thinks necessary, along the way.

Lord Phillips of Sudbury: My Lords, given that highly complex, voluminous regulation is meat and drink to City lawyers and accountants-for example, some of our largest public companies pay a trivial amount of tax by avoidance schemes of the utmost artificiality-might the time not have come to consider in principle legislation rather more like our common law principles, which are more difficult to evade?

Baroness Wilcox: In response to my noble friend Lord Phillips of Sudbury, the Government agree that principles-based regulation will be an appropriate approach in many cases. There are existing examples of principles-based regulation in a variety of areas, as I am sure he well knows, such as the UK Corporate Governance Code, which contains broad principles against which listed companies are required to report. However, we will continue to monitor this and I will continue to talk to him about it.

Lord Young of Norwood Green: My Lords, does the Minister agree that the high executive pay which the public at large find so objectionable is only one symptom of the real illness, which is the broken relationship between shareholders and managers? How are the Government going to repair this so that the values of shareholders are reflected in the decisions of management, including perhaps having an employee representative on remuneration committees?

Baroness Wilcox: The independent Kay review will be looking at these things, which we have previously discussed and debated. I do not think any of us like to see the distance between remunerations growing wider and wider. There is no doubt that the Government are following this up.

Lord Sutherland of Houndwood: My Lords, David Hume argued that greed, which he defined as an avidity to acquire possessions, belongings, property and money, was a force destructive of modern society. Could he possibly be right and, if so, what shall we do about it?

Baroness Wilcox: Well, my Lords, greed was of course only one of the seven deadly sins. If I reflect on some of the others, I can see that they can be just as contagious and nasty. However, I shall reflect on the fact that one of my favourite poets, Kipling, wrote a wonderful poem called Norman and Saxon in which he describes how the people of this land will put up with pretty well anything at all, but they will not put up with the fear of unfair dealing. If we look for fair dealing in the relationship between the Government, their people and our business community, we should get somewhere.

Lord Tebbit: My Lords, does my noble friend not agree that the best way of asserting the rights of the owners of a business, as opposed to the hired help-men like "Fred the Shred"-would be if some of them were put on trial for falsifying the accounts of the businesses which they ran? They either knew or ought to have known that the accounts and the balance sheets that they brought forward were false.

Baroness Wilcox: We know that the shareholders hold the power in this country's large corporations, and if they will, please, use it to call the people in those companies to account, we should see some movement. That is what we are encouraging.

National Institute for Health and Clinical Excellence
	 — 
	Question

Lord Naseby: To ask Her Majesty's Government what, if any, changes there will be in the procedures of the National Institute for Health and Clinical Excellence as a result of the recent life sciences Statement.

Earl Howe: My Lords, the Government's Statement on the life sciences set out a range of actions to support the adoption and diffusion of innovation in the NHS. This includes a commitment to establish, through the National Institute for Health and Clinical Excellence, an advice service to support medical technology companies in demonstrating the value of their products, and measures to improve NHS compliance with NICE guidance. It is for NICE to consider any changes to its procedures as a result.

Lord Naseby: Is my noble friend aware how welcome the Statement on life sciences was both to patients who suffer from chronic diseases and indeed to the pharmaceutical industry? However, that welcome is tempered by the statement that my noble friend has just made, because, quite frankly, NICE is and has been a dead hand on development for many medicines. I note that the current chairman has been in position for 12 years, and is scheduled to stay for another two, while the chief executive has been there for 12 years, and is scheduled for an unlimited term beyond that. Many charities have commented on NICE, and I will quote briefly from Sarcoma UK: "In the UK the delays caused by NICE can add years to introduction and mean patients die waiting". Against that background, will my noble friend ensure that NICE has a new, younger and more modern management?

Earl Howe: My Lords, I need to put on record that I have every confidence in the senior leadership of NICE. The current chair and chief executive have overseen NICE's development into an organisation of global repute that provides robust, independent guidance on a range of issues. Continuity of leadership can be a very good thing, and I believe that it is in this case, where the leadership is of the highest calibre. I would also say that significant improvements have been made to the timeliness of NICE appraisal guidance on new drugs. NICE is now able to issue draft or final guidance for a significant majority of the drugs that it appraises within six months of a drug being licensed. That is extremely good, considering the complexity of some of these assessments.

Lord Walton of Detchant: My Lords, does the Minister accept that the Statement by the Government last week on life sciences is one of the most welcome Statements relating to the life sciences that we have heard in this Chamber for many years? NICE has had a very proud record. It is required not only to assess the value and importance in medicine of drugs and new procedures but to consider their cost effectiveness. While there are certain situations in which it can rightly be criticised, it has made an immense contribution to the development of new procedures and the introduction of new drugs in the NHS. It is actually envied in other countries, not least in the United States, which wishes that it had a similar mechanism.

Earl Howe: My Lords, I fully agree with the noble Lord, who puts the case very well. That is why NICE will be at the heart of our work to improve quality in the NHS. We are re-establishing it, as the noble Lord knows, in the Health and Social Care Bill, extending its role to social care and embedding the role of NICE quality standards in statute. Of course, it will still be there to provide independent advice to support clinicians in the way that we know it has over the last few years.

Baroness Sharp of Guildford: My Lords, the White Paper talks about establishing a NICE implementation collaborative. Could the Minister explain to the House precisely what is meant by this?

Earl Howe: My Lords, the NICE implementation collaborative is a collaboration between NICE and representatives or stakeholder groups, including the chief pharmaceutical officer, the main industry bodies, the NHS Confederation, the Clinical Commissioning Coalition, the Royal Colleges and, if Parliament approves, the NHS Commissioning Board. The idea is that its members are going to work together to identify where support is needed and to identify solutions for the NHS through the development of implementation guidance-in other words, to improve the uptake of new and innovative technologies in the NHS.

Baroness Thornton: My Lords, the noble Lord, Lord Naseby, has never really liked NICE very much, so I am not surprised at his Question. A lot of the work of NICE is not about approving new medicines but about care pathways. I invite the noble Lord, Lord Naseby, to look at its last 10 press releases; they are all about how you treat COPD or HIV, the care pathways for people with mental illness and so on. Will the Minister confirm that NICE's guidelines on care pathways will have the same effect under the new architecture as they have today?

Earl Howe: My Lords, our expectation is that the NHS will continue to use NICE clinical guidelines to inform local improvement activity. These guidelines are tremendously valued and very authoritative. The noble Baroness is quite right: they have the potential to make a big impact on the quality of care and to add value.

Baroness Masham of Ilton: My Lords, does the Minister agree that the Statement was very encouraging? Will it keep pharmaceuticals and more research here in the UK? That would be welcome.

Earl Howe: My Lords, part of the objective of the growth strategy is to break down some of the barriers that undoubtedly exist to pharmaceutical companies conducting clinical trials in this country. There have been unwelcome delays in the system and we are putting in place several measures to get rid of them, which in turn should encourage pharmaceutical companies to view the UK as the platform of choice for clinical research.

Lord Foulkes of Cumnock: My Lords, has the Minister thought-

Financial Restrictions (Iran) Order 2011

Link to the Grand Committee Debate

Motion to Approve

Moved By Lord Sassoon
	That the order laid before the House on 21 November be approved.
	Relevant document: 34th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 12 December.
	Motion agreed.

European Union Membership (Economic Implications) Bill [HL]
	 — 
	Order of Commitment Discharged

Moved By Lord Pearson of Rannoch
	That the Order of Commitment be discharged.

Lord Pearson of Rannoch: My Lords, I understand that no amendments have been set down to the Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless any noble Lord objects, therefore, I beg to move.
	Motion agreed.

Welfare Reform Bill

Welfare Reform Bill

Report (2nd Day)

Clause 11 : Housing costs
	Amendment 12
	 Moved by Lord Best
	12: Clause 11, page 5, line 2, after "credit" insert ", subject to subsection (3A),"

Lord Best: My Lords, I am speaking to Amendments 12, 14 and 49. I know that amendments to my amendments have been put down and I will say a few words about them. I understand-I hope this is the correct procedure-that my Amendment 14, as amended, is consequential on Amendment 12. It is Amendment 12 that I shall concentrate on now.
	These amendments cover the new underoccupation penalty for council and housing association tenants, the so-called bedroom tax for those on housing benefit. I am very grateful to the noble Baroness, Lady Hollis of Heigham, for her support, and to the noble Lord, Lord Kirkwood of Kirkhope, and the right reverend Prelate the Bishop of Ripon and Leeds, for theirs. Since the noble Lord, Lord Newton of Braintree, asked for his name to be added to the list, although of course only four are allowed, I know the amendment has support across all of your Lordships' Benches. The amendment also comes with the backing of an impressive list of concerned charities and voluntary bodies led by the National Housing Federation and Shelter, to which I am very grateful for their hard work.
	The amendment seeks to prevent a change to the definition of underoccupation currently used by the Department for Communities and Local Government. The Bill paves the way for a much tougher test than at present, with a hefty underoccupation penalty-a cut to the housing benefit-for those whose accommodation fails the new test. Currently, as the Housing Minister Grant Shapps made clear in October, a household in council housing or a housing association home is deemed to be underoccupying only if it has two or more bedrooms above the basic bedroom standard. One spare room is permitted. Under the Department for Work and Pensions' proposed new definition, one so-called spare room would not be allowed.
	Under the fierce new test, a family would be counted as underoccupying if, for example, two teenage girls were not sharing the same room, or if an older couple, one of whom is below pension age, have a two-bedroom flat. All those deemed to be underoccupying will have to move and downsize to somewhere smaller. If they do not, even if there is simply nowhere smaller for them to move to, then they must pay the new penalty. Six hundred and seventy thousand households receiving housing benefit will be caught in this trap, rising to some 740,000 in the years ahead. If they do not move out, they will be charged an average of £13 per week, which will have to come out of their low earnings or their other benefits, which are meant to cover food, fuel, clothing, and specifically not housing. These are by definition very poor households, and the new tax will represent a significant reduction in their living standards.
	This may sound a heartless measure, but the Government's objectives are not dishonourable. The intentions are to reduce the high cost of housing benefit in respect of tenants who stay put, or to free up bedrooms for larger households where existing tenants are persuaded by the new penalty to downsize. I fear that neither of these perfectly understandable objectives will be achieved by this measure.
	First, it seems improbable that this will raise tens of millions of pounds. Those deemed to be underoccupying who seek smaller homes as a consequence may well have to move into the private sector, where rents, and therefore housing benefit, will be much higher, costing the DWP an extra £50, £60 or more a week. Secondly, the savings for the DWP will often translate directly into costs imposed on councils and housing associations. These bodies will have to assume the role of tax collectors, extracting the average £13 per week penalty from each tenant who does not move, which will prove to be an administrative and financial nightmare. To see who should be sharing a room, a landlord will need to keep track of the age and gender of each child. They will need to measure the bedrooms to see whether they can fit in two beds. They will need to find out whether family members are living at home or have actually moved out. It will require an army of snoopers to see who must be deemed to have a spare room.
	If tenants will not pay or cannot pay, the saving to the DWP simply becomes a cost to the council or the housing association in arrears and bad debts. Less money for social landlords means fewer improvements, fewer regeneration schemes, and fewer much-needed new homes. Since the underoccupancy issue is a much more significant one in the north, affecting 46 per cent of working-age tenants in the north-east, and 43 per cent in the north-west, this tax takes money out of local economies in places that most need it. In Bradford, for example, one of the big housing associations has calculated that if it cannot collect all the payments, and has to take the hit in lost rent, it will cost £2.7 million per annum, which it can ill afford. That excludes the heavy cost of evictions-pointless evictions, since so often there will be nowhere cheaper for the household to move to-wherever the landlord cannot keep tolerating rising arrears.
	Paradoxically, the new measure also makes addressing underoccupancy in council housing and housing association homes more difficult. At present, many social landlords have incentive and support schemes to address the very real problem of underoccupation by pensioner households. For these, a move to smaller premises is positively helpful in manageability, accessibility, cheaper heating and so on. However, pensioner households are excluded from the penalty, provided husband and wife are both over pension age. They can stay put, often in three-bedroom houses, which is what councils have mainly built for the past 70 years or so, without incurring any new cost or requirement to move. Conscientious councils and housing associations will have to change their priorities and henceforth allocate smaller homes that become vacant to younger households to save them from the new tax or penalty, which will lead to reduced incomes, possible arrears and debt. The penalty will hinder, not help, social landlords to tackle underoccupancy sensibly.
	These are the financial and managerial issues raised by the new measure but even more telling, I suggest, are the human and social issues. The new penalty-the fine where a spare room is discovered-is likely to make normal family life much tougher for the poorest households. The rest of us take for granted the flexibility that comes from having a spare room. Just because young Johnny has left home-has got on his bike to look for work elsewhere-it does not mean that he will never return. To move house as soon as he goes-the liability to the tax starts on the Monday morning after he vacates his bedroom-would be crazy.
	A spare room keeps a family together. It allows teenagers to have their own bedrooms; it allows parents to help older children pick up the pieces if they come home at a time of crisis; it allows the adult child to come home to look after a poorly parent when they come home from hospital; it allows the divorcee to have children to stay; it allows couples to sleep separately if one is ill or recovering from an operation; it allows the younger disabled child to have their own room; and so on. Houses and flats provided by councils and housing associations represent people's homes. They are not transit camps or hostels, with people constantly on the move as families expand and contract, but places to settle, put down roots and overcome some of the disadvantages that life has thrown at them.
	As Christmas approaches, most of us understand what a home can be and how a spare room is so often part of that. This amendment keeps the status quo and maintains the current definition of underoccupancy, which already expects those in social housing to live more compactly than the rest of us. Let us not go down an uncharted road that is likely to add to the hardships of hundreds of thousands of our poorest citizens. I beg to move.

Lord McKenzie of Luton: My Lords, I will speak to Amendments 14ZZA and 49A, which are in this group and are amendments to Amendments 14 and 49. I start with an apology to noble Lords for tabling these amendments somewhat late. We thought, on reflection, that it was appropriate to import into the proposition of the noble Lord, Lord Best, the circumstances in which a local housing authority or registered provider of social housing is able to make a suitable alternative offer to somebody who is underoccupying social housing. I am pleased that the noble Lord felt able to signify his acceptance of that.
	The presumption would be that such an offer would be taken up. In these circumstances a tenant could not rely on the spare bedroom to avoid an underoccupation charge-or tax, as it is more appropriately called. In that respect it would be consistent with Amendment 17A, tabled in my name and those of my noble friends Lady Hayter and Lady Hollis. However, the amendments would not disturb the basic proposition in the amendments of the noble Lord, Lord Best, so that where there is no suitable alternative offer the DCLG definition of underoccupation should be used, and the tax would not apply unless there was more than one spare bedroom. We support this.
	Our amendment leaves the definition of what constitutes a suitable alternative offer to regulations-the same formulation we have used in Amendment 17A. It raises questions of how and by whom the determination is to be made, but these practical issues should not be insurmountable and may be dealt with in regulation. The definition would carry the implication that suitability should reflect the broad needs of the actual tenant in terms of size, location, extent of adaptation, proximity to transport and relevant support facilities. It should recognise that it would not, in all circumstances, have to be bedroom standard plus one, and would not carry any implications that RSLs or local housing authorities would have to manage their housing stock in any particular manner, although tackling underoccupation should clearly be a key part of the strategy.
	No one doubts that underoccupation is a problem. We have a chronic shortage of housing stock and a huge demand for affordable housing. Yet the Government's policy is the wrong way to go about tackling the problem, as it punishes people for housing choices over which they have little control rather than enabling the best fit between the available properties and the needs of households. We have heard that this measure will encourage tenants to make the same choices about their housing as those in the private sector or those who own their own home. Social tenants are, however, the group least likely to be underoccupying their property using the standard DCLG definition. Eleven per cent of social renters, or 429,000 households, have two or more spare bedrooms above the bedroom standard and approximately half of these are pensioners. In comparison, 47 per cent of owner-occupiers and 16 per cent of private renters have at least two bedrooms over the standard. Social tenants are, therefore, much more likely than other households to be living in a property which is considered to be the right size. It seems that the Government are intent on strengthening this disparity. Under the reinvigorated right-to-buy provisions, there is nothing to stop tenants who underoccupy from buying their property at the full, relevant discount.
	These matters depend on whether an additional bedroom is fairly described as spare. This implies that it is surplus to requirements but, as we have heard from the noble Lord, Lord Best, for many it is not. The Housing Futures Network survey shows just some of the uses to which such an additional room might be put. These include a couple sleeping apart for medical purposes, storage of equipment-especially medical equipment-occasional use by overnight carers and many more which the noble Lord, Lord Best, instanced. We know that the vast majority of tenants do not recognise that they are underoccupying their homes at all. This is a reflection of space standards confirmed in the national figures on occupation. The DWP definition is out of kilter with what has become the norm for reasonable occupation in England. There also appears to be a huge administrative advantage in recognising the flexibility of the additional room. Without it, there is the risk of tenants having to constantly report changes of circumstances such as the son or daughter returning from university, somebody returning home because they have been made redundant and are struggling with their rent and the onset of an illness or infection with requires a couple to sleep apart. Are we really going to make these routinely reportable events?
	The Government have also suggested that a further aim of the policy is to increase work incentives. Claimants who are underoccupying and who cannot move will be expected to find, on average, £13 a week to meet the shortfall in their rent. The DWP impact assessment suggests that they may do so by moving into employment or increasing their hours-even in the current circumstances, even with the current unemployment figures. Given that the whole aim of universal credit is to make work pay, it seems unclear why this additional work incentive is needed. Even if it does force some people to move into work, they are likely to be outnumbered by those who will move into debt.
	In Committee, the Minister cited research by the Housing Futures Network, a coalition of four housing associations, which had interviewed 452 of their residents who would be affected by the underoccupation penalty. The survey found that 29 per cent of these would consider a move into work, but also found that 52 per cent would find it "very difficult" or "fairly difficult" to make up the shortfall in housing benefit. More than a third of those surveyed said that they were "very likely" or "quite likely" to move into arrears. The department's own assessment notes the possibility of arrears, noting that the cost to social landlords of implementing this policy will include the cost to run schemes to enable affected tenants in the social rented sector to move home within the sector. The assessment also noted that the costs of action taken in relation to tenants failed to make up the shortfall between the rent and their housing benefit entitlement.
	The third rationale given for the policy is the need to reduce expenditure on housing benefit. The equality impact assessment states:
	"The overall cost of Housing Benefit needs to be controlled, and reduced in order to tackle the budget deficit. This measure is part of the effort to rein in Housing Benefit expenditure".
	However, the impact assessment is also clear that these savings will be made only if the first intention of the policy, to encourage people to occupy more suitably sized housing, actually fails. The impact assessment states:
	"Estimates of Housing Benefit savings are based upon the current profile of tenants in the social rented sector, with little tenant mobility assumed. If a significant number of tenants wished to move, this would reduce direct savings and place extra demands on social landlords ... If all existing social sector tenants wished to move to accommodation of an appropriate size, there would be a mismatch between available accommodation and the needs of tenants".
	How perverse can a policy be, when structuring it to fail is an excuse for hitting 670,000 poor households? In this situation, where there is simply not enough accommodation available to ensure that everyone has a home of what the DWP considers to be the right size, tenants will be left with no choice but to either take a hit to their incomes or move to the private rented sector, where the state will pick up the bill for the considerably higher rent that tenants are likely to face.
	The people facing these choices are not likely to be able easily to absorb a £13-a-week hit on their income. The impact assessment shows that around 20 per cent of such families include a child under 16. The Housing Futures Network research found that more than 70 per cent of the households affected include someone with a disability or major health concern. The research also found that more than 40 per cent struggle to manage financially and more than two-thirds have an income of less than £150 a week, excluding benefits-meaning that they will have to spend around 10 per cent of their income to make up the rent shortfall.
	The Minister has suggested that shortfalls might be met by discretionary housing payments, but there has been no indication that local authorities will be given extra resources to meet the cost. The impact assessment finds that the cost merely of administering these payments could reach £500,000. I ask the Minister: is there to be a top-up for this policy-a top-up to the pot that my noble friend Lady Lister in Committee called the "loaves and fishes" approach to funding?
	The Government's approach will therefore fail to deal with the problem of underoccupation while asking some of the poorest and most vulnerable people to pick up the tab for this failure. We would expect a more rational approach to the problem of underoccupation that encourages local authorities to prepare a strategy to address the issues of occupation and enables them to encourage people to move, but only where suitable alternative accommodation is available.
	We know that good policy and the right incentives can enable a better fit between people's housing needs and the available accommodation. Some people do want to downsize. The Housing Futures Network found that 12 per cent of those surveyed said that their current accommodation was slightly too large for them, but that they needed help and support to downsize. Shelter cites the successful example of the Oldham programme that offers financial incentives and support with moving arrangements, which has freed up 130 family-size homes in 16 months. If it were possible to roll out this programme nationwide, Shelter estimates that about 45,000 homes could be freed up. Shelter emphasises that, to achieve that, local political will is needed as well as sufficient to local resource.
	To summarise, Amendment 14, as amended by our amendment, and our Amendment 17A would imply that people had to take up suitable accommodation when it was offered. Amendment 17A would prevent the underoccupation tax applying at all where there was no such offer, and Amendment 14 would allow the reduction in housing support-the tax-to operate where there was more than one spare bedroom.
	The Government's approach aims to tackle underoccupation, but will not do so, and will save money only at the expense of some of the poorest families in the country. Where there is a suitable offer of alternative accommodation, it may be reasonable to ask families to move, but to enable that to happen, we need to ensure that local authorities are working to address underoccupation rather than punishing those families for failure to do so. We support the amendment moved by the noble Lord, Lord Best, and, clearly, our Amendment 17A.

The Lord Bishop of Ripon and Leeds: My Lords, I have added my name in support of the amendment of the noble Lord, Lord Best, because of my concern, and that of those of us on this Bench, for the needs of children as we pursue the move towards universal credit. I am fully aware that that concern is felt on the government Front Bench as well.
	This is an area where a small change to the Bill will bring about help for a significant number of children who are under the most pressure in social housing. What is proposed by the noble Lord in the amendment-whether or not it is itself amended-is a definition of underoccupancy in line with that of Communities and Local Government and which simply reflects the reality of family life. Under the definitions of the Bill, a family with an eight year-old boy and a nine year-old girl in separate bedrooms would be deemed to be underoccupied. That cannot make sense.
	There is every reason to discourage genuine underoccupancy. When people think about underoccupancy, on the whole, they think of where a single person or a couple are left in a larger house, probably because their children have moved away. Surely that should not apply to a disabled child, for example, who needs care during the night and therefore needs a separate room. It should not apply to a room used for access visits by children following marital breakdown. It should certainly not apply to foster carers between placements. There is real concern that the Bill, if unamended, will discourage foster caring because the carers will not be able to retain rooms in which to place foster children if the need should arise.
	We-or, at least, the Members on this Bench-are going to hear a good deal over the next fortnight or so about there being no room in the inn. The amendment will provide the flexibility so that families can live the sort of lives that most of us take for granted. I hope that we will be able to enable this to happen by the pursuit of this or a similar amendment.

Baroness Hollis of Heigham: My Lords, I declare an interest as chair of Broadland Housing Association. I am delighted to support this amended amendment. DCLG says that you are underoccupying if you have two or more spare bedrooms; DWP, in the Bill, if you have more than one spare bedroom-a very tight definition. If you then do not move to somewhere smaller, you will be fined by having your housing benefit cut by 15 per cent.
	As my noble friend has said, this is not about finding homes for the 3 per cent of families who are overcrowded in this country. We could solve that tomorrow if we built bungalows or suitable flats for the pensioners who are queuing up for them-full stop. No, this is about cutting the housing benefit bill, by telling a third of our tenants in social housing, most of them disabled, that they have to find somewhere smaller to live. A middle-aged couple with health problems who therefore need that second bedroom will be entitled to only one bedroom. The family of four with two teenage daughters in a three-bedroomed home must move to a two-bedroomed home even though the girls will then have nowhere to do their homework. A disabled woman who sometimes has a carer staying overnight in her two-bedroomed flat must move to a one-bedroomed flat. A couple in their 50s, in a two-bedroomed house, who care for their grandchildren when their daughter with mental health problems cannot-in other words, they are occasional kinship carers-will have to move to a one-bedroomed flat, possibly some distance away, and the whole fragile family arrangement will collapse.
	In theory, all the people in these examples are expected to move. The children are expected to change school one year before GCSEs, the middle-aged woman is expected to move away from her mother whom she is keeping out of residential care by her support, the disabled woman to move away from the friends who help her cope by doing her shopping and laundry. Six hundred and seventy thousand families-between 30 and 40 per cent of all tenants in social housing, two-thirds of them with a degree of disability-are supposed to go on the move if they can. Fine, if they can; but for most, even if they want to downsize, they cannot. Even though they may be pensioners who cannot heat their homes, they cannot downsize, and the DWP knows it. The smaller flats are simply not there to move to and all the fulminations of the tabloid press-that Ministers expect them to downsize when the same Ministers know that they cannot-are therefore cruelly irrelevant.
	The National Housing Federation says that 180,000 households in two-bedroomed flats would have needed a one-bedroomed flat last year, but just 68,000 such flats-about a third of the number needed-became vacant. In future, the needs of pensioners who really want to move can never be met because, as the noble Lord, Lord Best, said, absolutely rightly, any smaller place that becomes available will have to be offered to much larger families who, however, do not want to move, rather than to the single pensioner who does. It is a cruel nonsense.
	The department admits that, in its own words, there is a mismatch, and that the smaller properties that people are expected to move to do not exist. The department expects that 85 per cent of all of these tenants will stay put and take the cut in housing benefit because they have no alternative, as the impact assessment admits at the bottom of page 2. The Government are counting on people not moving, despite telling them that they should. So the Government's savings are going to come not because people do what the Government tell them to do, but because people do not do what the Government tell them to do: they stay put, because they have no option, and then they are fined for doing so.
	What do the Government suggest that they should do to cover the shortfall? They should find work. Well, of course, if they could they would, and we welcome the support given for finding work within the universal credit system. Alternatively, it is suggested that they could take a lodger; but with small children I do not think that that will happen. The other suggestion is that they use-actually, use up-their savings. As the noble Lord, Lord Freud, reminded us on Monday, the average savings are only £300. That will last for four or five months of shortfall. After that, what then? It will be debts, arrears and pass-the-parcel. To pay the council tax, because their council tax benefit is being cut by 20 per cent, they will raid their housing benefit. However, that now does not pay the rent, so to pay that, they will fall behind on their utility bills, which are also on the rise. Threatened with their gas and electricity being cut off in winter, they will cut back on food, until ultimately the whole Ponzi debt pyramid created by this clause of the Bill will collapse. They will then face food parcels and eviction.
	However, as the eviction is not their fault, as the Minister agreed in Committee, they will not be intentionally homeless, so they will be put into highly expensive B&B at taxpayers' expense with all its cost and all its misery, as, with a history of arrears, they will not be accepted by any private landlord. In time, they will be rehoused-quite probably, if my housing association is anything to go by, in a house that is still too large, because that is all we have-and the whole vicious spiral one year on will start all over again, taking disabled adults and children through a relentless cycle of cuts and evictions.
	The alternative, of course, is that housing associations such as mine carry the arrears because we know the social and financial costs of eviction and the awful stress that it involves. Then what? Over time, the housing association goes into the red or, alternatively, we stop building and save the debt charges on erecting new homes, the money being spent instead on debts that come from cuts in housing benefit, thus guaranteeing that the shortage of social housing that is undermining the housing market continues for the next decade.
	It is so unfair. Let us take JSA as an example. If people break the rules on job search, we cut their benefit to change their behaviour. However, if they observe the rules and, after a proper job search, cannot find a job given the unemployment figures, we do not cut their benefit because it is not their fault and they cannot change their behaviour. That is the social contract of social security. You sanction people when they break the rules and should change their behaviour; you do not sanction or fine them but support them when that is not possible. It is what we do with JSA. The DWP is, in this clause, breaking that social contract with these changes to housing benefit. In all my time in the social security field, I have never known that contract to be broken in this way.
	Grant Shapps said that we should not bully people out of their homes. He is right. Yet in this Bill we are saying to people who have lived in their homes all their lives, done what was asked of them and behaved responsibly-two-thirds of them having some disability-that their benefit is being cut from underneath them through no fault of their own but just because we in Westminster are changing the rules. We tell them to downsize while knowing that they cannot do so, so we fine them instead for what is not their fault and for what they cannot change. It is morally wrong to punish people for something that is not their fault and to punish them when they are innocent. That is not decent, it is profoundly unfair, and we should not do it. If noble Lords agree, they will support the amendment today.

Lord Kirkwood of Kirkhope: My Lords, I speak as someone who supported Amendment 14, and I am very happy to agree to the composite that the noble Lord, Lord Best, has now accepted and put to the House. I think that it is one of the most significant amendments in the whole of the Report stage. I am now speaking to my own side of the House because I support this amendment very strongly. If the noble Lord, Lord Best, feels the need to press this to a Division, I shall support him, and I shall do so for a couple of reasons.
	First, it is important to reassure people on my own side that this proposal would not interfere with universal credit, the introduction thereof or anything thereby, but it would mitigate some of what I call the Treasury claw-back-that is, the money that was required of the department to set up the universal credit system. I do not think that that is an easy thing for the department to do but, for me, it goes too far. It is claiming back too much money too quickly from too vulnerable a client cohort, and that is something that colleagues on this side of the House need to bear in mind.
	At the risk of embarrassing the noble Lord, Lord Best, I point out that he has been active in housing for longer than any of us care to remember and is an acknowledged expert. The noble Baroness, Lady Hollis, and the right reverend Prelate are experts in their own fields. I have had some experience myself as a former chairman of the Social Security Select Committee in another place, and I am telling the House that today we are looking at a qualitatively different sort of cut.
	Secondly-seen from the perspective of the summer of 2010, when this deal was done with the Treasury-it was not unreasonable to start looking for the green shoots of a recovering economy by 2013 to 2014. I am no economist but I think that there is no prospect whatever of that happening, as the Office for Budget Responsibility has recently confirmed. I think that we are facing dire prospects. If we are facing a 13 to 15 per cent cut in our national wealth then people like me will be able to accommodate that, but people at the bottom of the financial pile will not. Were the assessment of summer 2010 made today it could not, in all conscience, extend to the level of reducing household incomes in the social rented sector by £676 annually. That is not fair. This does not affect the implementation of universal credit; it is an attempt to claw back money for the Treasury.
	Again, I say this to my own side of the House. This amendment mitigates the Bill's policy of tackling underoccupation; it is not a full frontal assault on the policy. The amendment targets the Bill to make it bite on high-level underoccupation. That is an important point. No one is saying that housing benefit does not have to be addressed in the long term or that underoccupation is not an important part of that, because it is. However, we should start as the amendment proposes and see how it goes. On 1 April 2013 we should extend the social security definition to the Department for Communities and Local Government definition and leave people with the flexibility to have one extra bedroom. We should see how that policy runs for a while. If it needs further amendment then the Government are perfectly entitled to return to it. They will be able to say they know how the provision has operated in terms of higher levels of underoccupation and now want Parliament's permission to take it to another level. That is a much safer way of proceeding in view of the impact of the change.
	The one thing I know about social security is that households rarely survive a loss of their housing security. Benefits can be reduced and people are very resilient in their budgeting to deal with it-they box and cox, they rob Peter to pay Paul and they survive. They do not survive if their housing security is put at risk. If that happens, the local authorities and the other public provision that we make for challenged families will have to pick up the pieces in all sort of ways, including adult dependency services and special needs provision. Local authority colleagues are looking at what is going to happen on 1 April 2013 with huge trepidation. If they are not, they are not doing their job properly. Another objection-again, I say this to my own side-is that there is no sensible transitional protection, as I would call it, for this measure.
	I am not making the Minister's job any easier although I am determined to stay best friends with him throughout Report. By saying that we have between now and 1 April 2013 for people to make arrangements, the Minister is suggesting that as soon as Royal Assent is given people will start looking for the houses that the noble Baroness, Lady Hollis, has just said do not exist. This is not a transitional protection of any kind. Most of the other changes in the universal credit in the Bill protect transitional arrangements, and rightly so. On 1 April 2013 people will hit a brick wall and arrears will spike in a way that means that we are transferring national debt through social sector working-age tenants into rent arrears. That will be picked up in other parts of public provision in a way that will not generate the savings that the Government think are to be drawn from these changes. It is impossible to quantify exactly how that cost-benefit analysis will work out in practice, but the impact assessment does not begin to give this House enough information to be confident. If we do not make these amendments, the Bill will cause dire consequences for 670,000 households across the United Kingdom.
	The consequences will vary in different regions. There is a spatial dimension to this problem. Some parts of the country will avoid the worst effects but some regions-it is quite clear which-will carry the weight. The effects will not be spread evenly throughout the United Kingdom. This is not something that local government will be able to deal with in bits and pieces. Some local authorities will be hit. The Prime Minister was trying to train a big bazooka on the French, I think, but he is training his big bazooka at 670,000 social-rented sector households on 1 April 2013, and there will be no place for them to hide, for the reasons that the noble Baroness, Lady Hollis, made out.
	If we are going to go for an unamended Bill, and if this amendment fails, it is unconscionable not to have a whole stream of exemptions. We discussed this upstairs in Grand Committee, and powerful cases were made by people who really know what they are talking about in terms of foster care and all the rest of it. There are all sorts of unintended consequences if we do not put a huge number of exemptions underneath this if the Bill's provisions go through as they stand.
	My position is, yes, let us tackle underoccupation. It will be very difficult for the families that are hit by it on 1 April 2013, but if we leave the Bill unamended, it will be uniquely difficult for a very vulnerable set of householders in the social-rented sector who are going to be hit by other things as well. We can see what they are. The noble Baroness, Lady Hollis, made an important point about the context and what else will be happening at the time. We are facing a long stretch of austerity before better economic circumstances arise.
	I say to my own side that this is not an ordinary amendment. The provision is not simply about trying to save money; it is about saving money in a way that is more likely to disrupt vulnerable households than just about anything else, partly but not exclusively because the household benefit cap is equally destructive of household integrity. This amendment deserves serious consideration. If noble Lords do not vote for it we are going to have to live with the consequences. I predict that, in the long term, those consequences will affect the public purse more negatively than the Treasury Front Bench and the Minister expect. This is a very important amendment. If the noble Lord presses it, I will certainly vote for it.

Lord Wigley: My Lords, I rise to speak in support of Amendment 12, indeed Amendment 14 as it was, and other amendments. If some of these amendments are not passed, there will most certainly need to be exemptions built in somehow or other, as the noble Lord, Lord Kirkwood, said a moment ago, or a lot of vulnerable people are going to suffer. I am concerned about the impact of the Government's proposals in relation to underoccupancy as they affect disabled people, including, particularly, those with learning disabilities. The Government will already be aware of concerns from the representations that have been made by Mencap -the noble Lord, Lord Rix, apologises that he cannot be here today. Numerous other organisations with an interest in this issue have also pressed the point that there is already a large shortage of suitably sized properties available to people who would under the new rules be deemed to be underoccupying their homes.
	Furthermore, representations have also been made that there are around 100,000 properties that have been adapted specifically to suit the needs of the individuals living in them who would be affected by the new rules, meaning that should the occupiers have to move, new adaptations would have to be paid for, which seems a rather less than sensible outcome.
	People with a learning disability regarded as underoccupying their home in the social rented sector will lose some of their housing benefit and have to make up the shortfall themselves. If they are unable to afford this, they will have no choice but to move to a different home. Very often, people with a learning disability will have established strong networks of friends locally, as well as family and support staff, and may not be in a position to adapt to the stress and anxiety of moving to a new home. The greater the distance from these networks, the greater the potential anxiety will be for them.
	I am concerned that some disabled people will either face a reduction in their income or have no choice but to move home as a consequence of the Bill's proposals. That is why I support the amendment.

Lord Newton of Braintree: My Lords, I apologise for once again coming in a bit late to the debate. On this occasion, I was at a meeting outside London and got badly held up by the demo currently taking place in Whitehall.
	I should declare an indirect interest in that my wife, as I think most in the House know, is a cabinet member of Braintree District Council and has a strong interest in social housing matters. I nevertheless wish to speak because, had the right reverend Prelate the Bishop of Ripon and Leeds not pipped me at the post, my name would have been on this amendment. I strongly support it and agree particularly with the words that have been uttered by my noble friend Lord Kirkwood.
	I am not in a position as a result of my lateness to repeat all the arguments of the noble Lord, Lord Best, because I have not heard them. I have no doubt that, had I heard them, I would have agreed with them, because I have discussed the matter with him on a number of occasions.
	I simply want to bring a bit of information from the coalface, as opposed to the rarefied atmosphere of Whitehall policy discussions. I happen to have in my hand a note issued by Braintree District Council about the new rules on underoccupancy. It thinks that these have probably the most far-reaching policy impact of any of the changes in the Bill. It makes the point that it applies different, more generous rules than those that are nationally applied to tenants claiming housing benefit. It gives priority for a family to move when the oldest child is five years old or more, not 10, and it recognises that this policy of using the younger age of five will be wrecked by the Bill.
	Similarly, it tries to rehouse people in advance of change, because of the delays that occur if they need a three-bedroom or four-bedroom house. I shall not quote the whole document, but it states that people are likely to wait for more than a year to move in the case of needing a four-bed property and a long time where they have children growing up. Let me quote just one sentence:
	"We therefore felt that it was better that a family, for example, with a boy aged 8 and a girl aged 6 should move to a home with 3 bedrooms and not be allocated a 2 bed and have to move again shortly afterwards. We felt this was better for neighbourhoods, for children's schooling and so on, as well as reducing the pressure on our allocations process".
	That makes complete social sense to me.
	I say in passing, as another illustration of one of my concerns about government policy as a whole, that we have just passed a Localism Act purporting to give local authorities greater freedom to make this kind of choice, and we now seek to pass a Welfare Reform Act telling them that localism is neither here nor there-they will do what they are told by central government. Somebody might perhaps try to explain.
	There are a number of other examples from the note that I could quote, but let me quote an additional note that should ring a bell at least on these Benches, about the rural effect. This was a subsequent note, which I happen to have in my hand, and it relates to a large village, which I shall not name, in the Braintree district. Greenfields-that is the housing association-gives details of what housing it has in this village and goes on to say:
	"This is a good example of a location where potentially, people claiming benefit would be forced to leave if they could not afford the extra rent to stay in the family home. [The village] is interesting because it is a relatively big village with a high overall level of stock and yet the balance of homes makes this policy a real problem for people needing to downsize from a 3 bed to a 2 bed. Clearly, people in smaller villages"-
	many rural-
	"are likely to face even more acute problems if they need to downsize. Given that we come under pressure to give people a priority to stay in villages, the policy looks like it may achieve the opposite".
	The rural effects of this are not to be underestimated and my guess is that my noble friend's colleagues in the Commons will face a barrage if and when this comes into effect. Indeed, I would venture to say that if this comes into effect less than two years before an election, with the impact that could be involved in some of the figures that have been discussed, it will not last five minutes when it starts.

Lord Stoneham of Droxford: My Lords, I declare an interest as chair of First Wessex Housing Association and Housing 21. I am pleased to speak in this debate initiated by the noble Lord, Lord Best. I think everyone in the House today understands the extreme pressure of the need to reduce the housing benefit budget and to tackle the issue of underoccupancy at a time of housing shortages. We should not forget that underoccupancy of social housing is nearly matched by 50 per cent overoccupancy.
	In Committee, the Minister set an objective for the changes he was proposing. He said:
	"Housing benefit ... will become more balanced in a way that will restore fairness, encourage better use of our existing social housing stock and encourage more people into employment".-[Official Report, 18/11/11; col. GC 71.]
	The problem is that the market for social housing is not flexible; it is quite rigid. It is a fight to get a home and, in severe shortages, requirements and needs are not easily matched. We wish we had a situation where people could have a better choice, but it is simply not possible. What we have available in any locality is way short of need, and often what is available cannot specifically match need. On the issue of underoccupancy, we know that there will be something like 180,000 under retirement age who want to move but that the annual available housing for them is about one-third of this.
	Housing requirements change through life. In a rigid market where people cannot easily match their requirements to supply, some flexibility is required. Otherwise, allocations will be even more difficult. The Minister's objective-balance to restore fairness-will not be fair if an individual wants to move home and cannot. The person will have to find extra income and, in the current economic climate, as my noble friend Lord Kirkwood, said, it will be extremely dubious whether they will be able to find the significant extra income they need. Let us not forget that in this situation-my noble friend also referred to this-underoccupation is greater in the north, and so there is a regional dimension. Thirty pounds a week is a lot of money for people least able to afford it, and 150,000 households will have to find nearly twice that.
	The Minister also said that one of the objectives is to provide balance to make better use of our existing stock, but the reality is that the existing rigidities will be distorted by this change. Available new housing stock will now have to be used to move people. The people who probably need the most encouragement to move are those who are retired-who are underoccupying-and we will not now have the facility to move them. They are the people whose household costs need to be reduced. Indeed, we improve the housing benefit bill by moving them. As the housing stock is re-let, we will be required under the Government's housing benefit reforms to let some of these houses at affordable rents. So for those people who take on that stock, we will probably be paying out a higher proportion in housing benefit.
	The Minister gave us, in his Committee speech, figures from the future network. Under the claimants benefit research, he said that of the 670,000, 25 per cent want to move; 50 per cent will not move; 29 per cent are looking for increased work and income-which is going to be difficult; 15 per cent say that they will take in a lodger, and 35 per cent are said to be likely to go into arrears. Those are pretty dramatic figures. He also said that over the next couple of years we will look at putting strategies in place to make sure that this does not happen. The problem is we only have 15 months in which to do this, not a couple of years, as the measure comes in in April 2013. That is madness.
	We have already heard this referred to as a room tax. In fact, in Committee, somebody referred to the window tax. It was not in the time of Queen Anne, as the Minister mentioned; it was William and Mary-1696. I looked it up; two shillings per window. That is interesting; £11.20 in real money-it is not much different. I am assured also by the research that the phrase "daylight robbery" did not originate from that time. We can imagine, however, the political campaign-and the slogans-should this room tax come in on a single day. I do not fancy the Chancellor-I hope my colleagues will remember this-standing up in March 2013 to give his Budget speech when in April 2013 this change will be coming in. I bet you he will have to move politically at that time, even if he does not move now.
	We have to expect that 25 per cent of people will move. How is this to be organised in 15 months? There are not enough houses being built to do this. Housing associations do not even know how many and who will be affected. There is a lack of information. What are the strategies? What must the Government do in this situation? What do they need to say today?
	The first proposal is that of the noble Lord, Lord Best: allow an extra room for flexibility. It is probably the best proposal, but-as we will be told-this will take £300 million of the £500 million savings. It is not actually a great deal of money. I just ask the House to think what the Chancellor will be thinking in March 2013. It is not clear that the £300 million in savings will come through. I expect that a lot of children and other relatives will suddenly emerge in these houses. Re-lets, as I have already mentioned, would lead to higher housing benefit claims. There are also the costs of moving, plus the costs of discretionary housing grants, and so on. Retired people who we want to move into smaller accommodation-saving housing benefit and saving their household costs-will not be able to move.
	The second proposal is to extend the transition so it coincides at a minimum with the anniversary of tenancies; that ideally, as the Minister has already said, we should spread this change over a couple of years so that people can adjust. If you are trying to take from the poorest people these sums of money, they need time to adjust. So do the housing associations and the housing providers. They need time to adjust to allow a better transition, to allow the adjustments in housing stock. We cannot expect everybody to simply change on day one in fifteen months' time.
	The third option is to extend discretionary housing grants. We hear this on each occasion, but we are not sure how that is going to be administered.
	I urge the Government to move on this issue, for sensible housing requirements, for fairness and for assuring that the poorest and the least resourced will not assume a significant burden at a very difficult time. Above all, the providers also need time and flexibility to adjust the housing supply to the new demands and the new needs.

Lord German: My Lords, I have two groups of people to whom I want to refer. My noble friend Lady Thomas referred to them in Committee, and I referred to one of them. What does the Minister anticipate doing for foster carers? We have already been told that we have a shortage of foster caring in this country, and foster carers need to keep a bedroom to be able to host and look after children in foster care. It is very important indeed-and I think that the Minister acknowledged this in his response in Committee-that something needs to be done to accommodate the needs of that group of people.
	The second group of people are those who have had adaptations to their properties. Those adaptations probably cost the public purse quite substantial sums of money, so it does not make sense, for example, to require people to move from one property that has a stair lift to another where a stair lift has to be put in place. Can my noble friend tell us what he anticipates doing for both those groups?

Lord Freud: My Lords, I need to thank noble Lords to start with for a thoughtful and insightful debate.
	The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure, which without reform would reach £25 billion in cash terms by 2014-15. With savings from this measure estimated to be around £500 million per annum, it will play a key role in our efforts to control housing benefit expenditure and to tackle the budget deficit. In these difficult economic times, we cannot avoid having to make these choices. I assure noble Lords that these decisions have not been taken lightly.
	In case there is any doubt, let me remind noble Lords that the size criteria measure will affect only working-age housing benefit claimants living in the social rented sector who are underoccupying their accommodation. For a family of four, with two adults and a teenage boy and girl, we are proposing that they will be entitled to housing benefit for a three-bedroom property with a living room, kitchen, bathroom and possibly even other rooms, such as an extra bathroom and study. This is the same as we allow for people living in the private rented sector. Those in a property that has more bedrooms than the size criteria allow will receive a percentage reduction in their eligible rent, meaning, on average, a shortfall of around £14 per week.
	It is only fair that everyone plays their part, but we will, of course, ensure that we maintain safeguards for those in the most vulnerable circumstances. However, even with the reforms that we have started making to housing benefit, we are still expecting to spend nearly £23 billion on housing benefit this year. By the end of the spending review, we expect to achieve £2 billion in annual savings from the package of housing benefit reform. That is £2 billion off the £25 billion that I referred to. The Government believe that it is right that those living in oversized properties in the social rented sector contribute to those savings. Claimants in this sector make up over two-thirds of all housing benefit claimants, although most of the £2 billion in annual savings will still come from claimants living in private rented accommodation.
	In England, approximately 420,000 households in the social rented sector underoccupy their accommodation by two bedrooms or more, while over a quarter of million households are overcrowded. What is more, 1.8 million households are currently on the housing waiting list in England. Over 700,000 of these households belong to reasonable preference groups, which means that they are treated as having a higher priority on the waiting list. This includes the homeless, people living in insanitary or overcrowded housing, and those needing to move because of a medical condition.
	This measure is necessary to control spending. It is necessary because spending was allowed to spiral out of control under the previous Government, but we also believe that it will encourage greater mobility among households living in the social rented sector. It will help local authorities and other social housing providers to make the best use of their existing housing stock. It runs alongside and in support of measures introduced as part of the Localism Bill/Act, such as increased flexibility for local authorities to manage their housing waiting lists and the development of the national home swap scheme.
	We have discussed this measure in detail and I have listened to and thought at length about the important issues that have been raised. We have various amendments to get through, but it might be helpful if I first set out what conclusions the Government have arrived at and what we intend to do. Noble Lords will understand that there is limited scope for manoeuvre within such a tight fiscal context, but I am pleased to announce today an additional £30 million that we will add to the discretionary housing payment budget from 2013-14, in support of the introduction of the size criteria into the social rented sector from April 2013. We believe that the amount made available is reasonable, based on what we know about the numbers likely to be affected by the measure. We think that £30 million could assist around 40,000 cases. It could help even more if local authorities choose to use DHPs to make up some, but not all, of a claimant's shortfall.
	My noble friend Lord German asked what that funding is for. It is specifically aimed at two groups. The first group is disabled people who live in significantly adapted accommodation, and the funding is to enable them to remain in their existing homes. I hope that goes some way to satisfying the noble Lord, Lord Wigley, as well on that matter. The second group, which a number of noble Lords mentioned, is that of foster carers. We have carefully assessed the number of foster carers who will need to keep an extra room for when they are in between fostering, and we have an amount for them. I hope that goes some way to satisfying my noble friends Lord German and Lord Kirkwood on that matter, and indeed the right reverend Prelate the Bishop of Ripon and Leeds, who I hope feels that there is some room at the inn for this very vulnerable and important group.
	The case for providing some mitigation for these two groups is clear, but we have decided that the way to do it is through the discretionary housing payment route rather than through specific amendments. We need rules in the benefit system that do not increase administrative complexity. We need to be able to make and deliver effective legislation not just within housing benefit but within universal credit. Such exemptions might, for example, include those who would otherwise have met the shortfall themselves, and might miss others who would have had a stronger case for additional support. I am convinced that a more localised, discretionary approach is the best way forward. It means that the limited resources that we have can be efficiently targeted at those who need them most. Of course we would like to do more, but there is simply no more money available.
	Discretionary housing payments can be paid only where there is a linked claim to housing or council tax benefit. This is in effect, therefore, ring-fenced funding, although we cannot tell local authorities precisely who they should spend it on or how much they should spend. That is for local authorities to decide. However, we provide further guidance for local authorities through the DHP good practice guide. We have an illustrative draft of that, which I can share with noble Lords this evening, and we look forward to refining that with the input both of noble Lords and key stakeholders.

Lord McKenzie of Luton: Would the Minister clarify whether that £30 million is a one-off figure or an annual figure, and from when does it commence?

Lord Freud: I am pleased to clarify that that is an annual figure that starts in the year 2013-14, when the actual provision comes in.
	Next, I would like to clarify the rates of reduction to be applied under this measure. In setting the percentage reduction rates, we have considered the sorts of rent differentials seen in the social rented sector alongside the question of affordability for the taxpayer. We intend to set the percentage reduction rates at 14 per cent for underoccupiers with one additional bedroom, and 25 per cent for underoccupiers with two or more additional bedrooms.
	We think that the average cost to affected claimants, in terms of reduced housing benefit entitlement, will be around £14 a week in 2013-14. The majority of claimants affected-just over three-quarters of the total-are underoccupying their accommodation by just one bedroom. For this group, the average reduction will be around £12 a week. For those underoccupying by two or more bedrooms, the average reduction will be around £22 a week.
	I would like to assure noble Lords that discussions within the coalition Government in designing this measure were thorough and productive, and these will continue through implementation. My officials are working closely with the Department for Communities and Local Government, the Department for Education, and the devolved Administrations.
	It is worth picking up the issue, which my noble friends Lord German and Lord Stoneham raised, of whether we can make the transition easier. It is technically possible to stagger implementation arrangements, based on the anniversary of the claimant's tenancy, but this move is not cost-neutral, and the planned savings will be reduced, albeit modestly.
	I must be clear that, principally, I am more concerned about the ability to deliver the proposal because it might be very difficult to police and monitor. I am concerned that some landlords will offer new tenancy agreements to existing tenants, so that implementation of this change is delayed, and then the costs would spiral very substantially.
	We are, however, determined to make maximum use of the time available between now and the measure coming into force to help prepare local authorities and social landlords for the changes, which in turn will benefit those who are affected. I am sorry if I rather loosely used the term "two years", on which my noble friend picked me up.
	Amendments 14 and 49, from the noble Lord, Lord Best, would exempt claimants from the measure where they underoccupy by just one bedroom. Amendment 12 would appear to tie Amendment 14 in with the housing costs calculation for universal credit.
	There is a tension here between the bedroom standard, which is a widely used standard which views underoccupation as having two or more extra bedrooms, and the local housing allowance size criteria, which we propose to use for housing benefit purposes and which we already use for the private rented sector.
	Our size criteria take a more generous view on the age at which someone is entitled to their own bedroom. Since the deregulation of rents in 1989, we have been using 16 as the adult threshold in size criteria for housing benefit purposes. The bedroom standard, on the other hand, sets the threshold at 21. Against these stricter criteria, however, the English Housing Survey and other similar surveys then consider the household to be underoccupying their accommodation only if they have more than one additional bedroom above the bedroom standard, a point the noble Lord, Lord Best, made. The size criteria that we propose to introduce into the social sector consider any number of spare bedrooms to be underoccupation. Neither approach is right or wrong. In some cases, the bedroom standard plus one will be more generous than the local housing allowance size criteria, in some they will work out the same and in a few cases the LHA size criteria would actually prove to be more generous.
	On the point made by the noble Baroness, Lady Hollis, about the person who needs an overnight carer, I need to make it clear to the House that where someone needs an overnight carer we allow an additional bedroom for that non-resident carer, and we have done so from June this year.

Baroness Hollis of Heigham: My Lords, I said that she would "occasionally" need-in other words, the assumption is that she would not normally need an overnight carer but occasionally might. The Minister has not covered that.

Lord Freud: I suspect that we can look at the difference between "occasional" and "regular" in detail outside the House. Maybe we can exchange letters on the matter.
	In Grand Committee, the noble Lord, Lord Best, spoke of the experience of owner-occupiers, explaining that 83.9 per cent would fail against our definition of underoccupation. I put it on record, however, that a similar proportion of working-age owner-occupiers, 86.7 per cent, are in work. We are not suggesting that households in the social rented sector should live differently. We all share the aspiration for a home in which our children can thrive, concentrate on their homework or leave to study or find work, but still have the option of returning home sometimes. To realise that, though, must the taxpayer be expected to pay in full for those extra rooms just because those people live in the social housing sector? The Government believe that it is reasonable to ask for a contribution toward the rent where there is, by definition, some degree of underoccupation. It is not a change to the allocation rules; it is a measure for housing benefit purposes only.
	The research from the Housing Futures Network explores how those claimants affected by the measure might respond. As well as the 29 per cent who were likely to try to find work or increase their earnings, around 15 per cent thought that they would take in a lodger or ask another family member to move in. Another sizable group, perhaps 20 per cent to 25 per cent, thought that they were likely to seek help to pay the rent from someone within or outside the household-someone they know. Around 25 per cent thought that they were likely to downsize. There were also those, as some noble Lords have pointed out, who feared that they were likely to get into arrears; that figure was around 35 per cent. We will do our utmost between now and the measure coming into force to minimise that risk. This is what we are looking at as part of our work with the implementation group.
	That said, we cannot ignore the financial position. I emphasised at the beginning of my response that the introduction of size criteria is fundamentally about savings. Without the inclusion of those who underoccupy by one bedroom, we would not achieve the £500 million savings expected from 2013.
	The noble Lord, Lord Best, challenges our savings estimate. As I have set out in the evidence, though, a majority of people will pay the additional amount for the larger property. The cost of renting in the private rented sector may generally be higher but those who choose to move out of the cheaper social housing into private housing because they are underoccupying will by definition free up accommodation in social housing that can be offered to those on the housing waiting list or those living in expensive temporary accommodation. That argument from the noble Lord simply does not stand. If we excluded one-bedroom underoccupiers, we would lose around £300 million of the estimated savings. The fiscal case driving this measure forward must not be underestimated.
	One other point made by the noble Lord, Lord Best, is about who is affected, and about concern for children. But by definition we are looking at people whose children have left, and so are underoccupying. The impact assessment shows that claimants with children are less likely to be affected by the measure than those without children. Only around a third of the claimants potentially affected have children living with them.
	The other point raised by the noble Lord was about the difficulty of this working-age group pre-empting the room that pensioners might be transferred to. However, this measure will, over the longer term, help ensure that people are in suitably sized accommodation before they become pensioners. Our expectation is that the proportion of pensioners who need to or could downsize will in future be lower.
	The other concern raised by the noble Lord, and indeed by the noble Baroness, Lady Hollis, is the implementation risk of costs to landlords. We are planning to work through these issues as part of our engagement with other departments, including the devolved Administrations, and with social landlords and local authorities. An implementation group has been set up which is already being used to explore the potential impact on landlords' costs as a result of this measure. We should bear in mind, however, that social landlords already collect rent from many claimants: for example, where the claimant has some income and only receives partial housing benefit, or where they have a non-dependent living with them.
	The Government recognise that households are sometimes allocated properties with at least one extra bedroom by their landlord. This measure does not preclude them from continuing to do so. It is of course important that any household being allocated a larger property is aware of the implications in relation to housing benefit. We will work with stakeholders to ensure that communications are effective. Exempting this group is simply unaffordable. I beg the noble Lord, Lord Best, not to move Amendments 14 and 49.
	Amendments 14ZZA and 49A would effectively modify that exemption to where there is no suitable alternative accommodation within the social rented sector, alongside Amendments 14 and 49. I will now explore that issue in relation to these amendments, and with regard to Amendment 17A.
	We have heard a great deal about the lack of housing supply, and therefore the lack of suitable alternative accommodation. I recognise that there is not the sufficient range of stock in many areas that would enable landlords always to suitably house people according to the size of their household. That was acknowledged in the impact assessment. Noble Lords have highlighted some clear examples of when an extra bedroom is not spare, but is actually being put to good use, such as in the case of teenagers under 16 of the same gender having their own room to do their homework.
	As I have said, the LHA size criteria are more generous than the bedroom standard, in that they provide for an extra bedroom for every adult from the age of 16 rather than 21. However, these size criteria are for housing benefit purposes only. We are not insisting that everyone is housed according to those rules, but it is right to expect those who have that additional space-whether it is spare or not is not necessarily the point-to make a reasonable contribution to the rent. This puts those in the social rented sector on a more equal footing with those claimants living in the private rented sector where size criteria have always played a part in the housing benefit claim. Indeed, owner-occupiers also have to consider what they can afford.
	This exemption is too broad, and would be complex and costly to administer. Suitability of accommodation will vary according to an individual's circumstances. If there is a smaller property in a location 60 miles away, where there happen to be jobs, is that suitable? It would not be possible to pin down through regulations unless they were so broad as to open the door to exempting almost everyone, thus significantly reducing the potential savings. It is not possible to predict the loss in savings, given the uncertainty surrounding this amendment, but it is not hard to see how the number of exemptions through this approach could spiral out of control.
	In most cases where there is no suitable accommodation, we expect that claimants and their partners will find ways of meeting the shortfall-through employment, we hope, or through increased earnings. For those who are genuinely struggling to meet the shortfall and who have exhausted all possible options, the local authority might consider a discretionary housing payment. I beg the noble Lord, Lord McKenzie, not to move Amendments 17A, 14ZZA and 49A.
	In summing up, I emphasise that this is not the end of the process. We have had to make some hard choices here to make the necessary savings as part of the deficit-reduction plan. We are balancing that by protecting those for whom being able to remain in their adapted homes and lead an independent life is rightly not something to be messed around with. Likewise, we recognise the vital work of foster carers and have in place additional funding to ensure that they are not discouraged. A watchful eye will be kept on the £30 million boost to the discretionary housing payment pot. A review will inform our evaluation of this measure. We have more than a year until implementation and we are using that time to explore the risks for landlords and claimants alike to minimise the potential for arrears and all the associated costs that can arise from them. We will continue to work closely with our stakeholders and draw on their expertise in this House. I ask for this amendment to be withdrawn.

Lord Best: My Lords, I am deeply grateful to Members from all parts of the House for their support. I am grateful to the noble Lord, Lord McKenzie, for the refinement to my amendment, which I fully accept. I hope noble Lords who have spoken will allow me not to summarise the excellent points that they have made and go straight to a few words about the Minister's very helpful remarks. I congratulate him on bringing an extra £30 million this evening to alleviate the problems created by this legislation. Perhaps I could just pick up on two key points that he made.
	The first is the suggestion that the proposed new definition of underoccupancy would bring social housing into line with the private rented sector. Tenants in the private rented sector are unaffected by this measure. They operate within a quite different framework, whereby the maximum of the local housing allowance is calculated for them based on this tight definition of underoccupancy but with the opportunity for the tenant to use the cash-the benefit-for something smaller, perhaps in a better area, or larger, perhaps in a less popular neighbourhood. In any case, those in the much more expensive private rented sector are predominantly younger, single and childless households, more than half of which stay for less than two years, and a third for less than one year. Unlike those in social housing, they seldom comprise a family needing a long-term home in which to bring up their children.
	Secondly, the concession that the Minister has brought to us this evening would allow discretionary housing payments to be made to people whose properties have been specially adapted for a disabled member of that household. The discretionary housing payments would also be available where a foster child is coming into the property. These are excellent exclusions, or opportunities, at any rate, for a discretionary payment to kick in. One could list a whole lot more. Indeed, as one gradually looks at this, one begins to do just that. Why not include people with other disabilities-perhaps a family where, as the noble Baroness, Lady Hollis, suggested, a carer comes to stay periodically to provide respite for a parent? Perhaps an exception could be made where an elderly person has a spouse aged only 60. As things stand, they would both have to move or pay up.
	The Minister says that everyone must pay their part and, on average, £14 per week is the part that many households will have to pay as the penalty charge. Even if it is £12, or £22 at the other end, I suggest that these are serious sums of money for many people in very low-income households, if they stay put. The option of moving does not exist for a lot of them.
	I think this is the moment at which I would like to test the opinion of the House.

Division on Amendment 12
	Contents 258; Not-Contents 190.
	Amendment 12 agreed.

Amendment 13
	 Moved by Baroness Turner of Camden
	13: Clause 11, page 5, line 21, at end insert-
	"(3A) In the case of alleged under-occupancy regulations may provide-
	(a) in the case of a disabled person, relocation shall not be required nor shall benefit be reduced, where adaptation has occurred and local services are provided, in order to deal with the disability;
	(b) in the case of a person capable of work-related activity, reduction of benefit or relocation shall not be proposed unless suitable employment is available within easy access of alternative accommodation.
	(3B) Relocations may only proceed on the basis of agreement with the claimants concerned."

Baroness Turner of Camden: My Lords, I have had a very large number of letters on the whole issue of underoccupancy. The vast majority of tenants simply do not recognise that they are underoccupying. Eight out of 10 believe that the size of their home is just right, and that probably applies to a lot of us. Of course, some people would welcome the opportunity to move to somewhere smaller. If children have left home, a smaller place might be less trouble, provided, of course, that it is available. But this does not apply to everyone, particularly the elderly and the disabled.
	Take the case of a woman who is disabled and has recently been widowed. She has lived in the same accommodation for more than 15 years. She is now alone and on benefits. She has neighbours who give her support. She is told that she is underoccupying and must either relocate or pay more. She cannot afford to pay more and dreads the thought of moving. She needs the support that she is getting in the community that she has lived in for so long. This is an actual case that has been reported to me. It seems to me that it would be wrong to insist on relocation in such a case. It might even be more expensive if the woman became ill and had to be hospitalised.
	There is also, as is the case with many disabled people, the question of adaptation. Homes are often adapted in a gradual way as people get older, perhaps starting with a change in the bathroom with a shower in place of the bath, perhaps then installing a stair lift, and then adding to these adaptations as the debility gets works. This is one of the areas that the Government are giving serious attention to, as the Minister indicated in his response this afternoon. I am glad to note that. The presence of adaptations is one of the two areas in which the Government are apparently ready to make some concessions, and I welcome that.
	Other instances in my amendment relate to job opportunities. The Government want as many people as possible currently on benefits to go to work. Some of them are capable of light work and many actually want to work. One should not pay too much attention to media stories about people being only too willing not to work. Many people want to work, because work is a social function anyway. However, if someone is forced to relocate, it may be to an area where jobs do not exist, or, if they do exist, they are a long distance from the relocated home. That may not be suitable for a person able only to do light work. There may also be additional travel costs.
	The point of this amendment is to acknowledge that this is not an easy matter. We have noted that from some of the speeches made today. Compassion is required when dealing with people in this position. If the alternative is relocation, it should be by agreement. A home is extremely important to most of us. Homes, and the personal possessions they contain, represent lives. We have to be very careful about the way in which this situation is handled. If the Government proceed with their proposal unaltered, there are substantial risks that entire communities could be disrupted. Long-term tenants-45 per cent of the households have been tenants for 10 years-could be affected. People develop local connections and the disruption would be enormous.
	If we do not handle this properly, human tragedies could come to pass. For that reason, I hope that there will be support for the suggestions made in my amendment. I should be grateful to learn from the Minister how exactly the Government intend to cope with the situation. I beg to move.

Baroness Wilkins: My Lords, the Joint Committee on Human Rights has just published its legislative scrutiny of the Welfare Reform Bill in its 21st report of the Session. I quote from its recommendations:
	"The National Housing Federation estimates that about 108,000 tenants in social rented properties adapted specifically for their needs are likely to be affected by the introduction of the size criteria to restrict housing benefit. If such tenants were forced to move into properties unsuited to their needs this might risk breaching their Article 8 rights to respect for private or family life as well as being potentially discriminatory.
	The Government has indicated that it is prepared to look at exemptions for individuals who are disabled, where their homes have been subject to extensive adaptations. However, this would not address the disruption to patterns of caring and support networks which can be vital".
	The JCHR concludes:
	"We recommend allowing some additional discretion to exempt disabled people facing exceptional hardship from the under-occupation provisions".
	I hope that the Minister will not only agree to the amendment but also agree to the JCHR's recommendations.

Baroness Thomas of Winchester: My Lords, I have a question for my noble friend about the disabled facilities grant, which I gather is rising to £180 in the current fiscal year. However, as we know, this grant is not ring-fenced, although it is still a mandatory grant. I find that a slightly odd concept. I just want to make sure that this grant is quite separate from the discretionary housing payment. What redress will a citizen have if the local authority is being rather mean with the mandatory disabled facilities grant? I have not quite got my head round that matter. It may be entirely a matter for the local authority but I wonder whether my noble friend can help me regarding the disabled facilities grant in particular.

Lord Lester of Herne Hill: My Lords, as a member of the Joint Committee on Human Rights, I simply say how glad I am that the noble Baroness, Lady Wilkins, has drawn attention to that part of our report. I agree with her speech.

Lord McKenzie of Luton: My Lords, we have Amendment 14ZA in this group, which concerns foster carers seeking exemption from the underoccupancy penalties. We know-indeed, we heard a short while ago-that the Government are sympathetic. When we discussed this in Committee, the Minister told us that it was not possible both to disregard foster allowances as income and to include foster children in the assessment of housing need. However, the National Housing Federation has suggested that discussions between fostering organisations and DWP officials have not shed any light on why the trade-off would be inevitable and has suggested that it could be sorted out by legislation.
	As we heard earlier, the Minister's solution to supporting foster carers was the use of discretionary housing payments and the additional funds that have been made available, and it would be churlish not to welcome that. However, it is hard to see how this can adequately address the problem, given the many other calls on these payments that are likely to be made. Of course, these payments are discretionary, so there would be no certainty for those looking to foster a child that their housing benefit would be covered. It is suggested that the Minister cannot possibly see the inclusion of foster carers within the underoccupancy penalties as a cost-saving measure. As the LGA has put it, if these penalties apply, foster carers could be forced to give up this role at a time when there is a national shortage of 10,000 foster families across the UK. I urge the Minister to give due consideration to this matter, but in doing so I welcome the announcement that he made earlier.
	My noble friend Lady Turner introduced amendments that covered three issues. The first was about adaptations to properties, which has been fully covered. My noble friend Lady Wilkins made the important point that this is not just about the physical adaptations to properties but about the support that people need in their community.
	My noble friend also referred to someone in the work-related activity group being exempt unless there was suitable employment within easy access of alternative accommodation. We need to know that someone in the WRAG would not necessarily need to be in employment but to be working closer to the labour market. Nevertheless, my noble friend makes a valid point.
	My noble friend's third point was about claimants agreeing to any proposed relocation to alternative accommodation. In the debate on the last group of amendments, we debated a little the issue of suitable alternative accommodation for people, what "suitable" might mean and the complexity that might come with that. To the extent that it features in these arrangements, the opportunity for the claimant to be able to agree to what is reasonable is a fairly fundamental point as well, so I support my noble friend's contention.

Lord Freud: My Lords, Amendment 13-and Amendment 48, which is a repeat of Amendment 13 but relates to Clause 68-tabled by the noble Baroness, Lady Turner, seeks to make a number of changes. I spoke earlier about how I propose to address the noble Baroness's valid concerns about those living in adapted accommodation, and I hope that that has satisfied that particular position. On the related point raised by my noble friend Lady Thomas, the disabled facilities grants are quite separate from this; they are administered by local authorities to meet those costs. It is a separate pot, if you like, run by local authorities and not by the DWP.
	Amendment 13 would create a new Section (3A). Proposed new paragraph (b) deals with the availability of work in an area and seeks to exempt claimants from the underoccupation measure by their not being relocated to an area where there is no suitable employment, or from a reduction if there is no suitable employment near their current home. We are not in the business of dictating to people where they can or cannot live and we have no intention of doing so. We expect that most people will choose to stay where they are and meet the shortfall. This was supported in the research from the housing futures network, which we have already discussed.
	Let me put into perspective the numbers of people who are looking to increase their hours of work. We are talking about between two and four hours per week at the national minimum wage to meet these shortfalls. The amendment links an exemption to the availability of suitable employment, which would be hugely complicated to administer. We would need to define suitable employment and easy access, and in our view those are decisions for the tenants themselves to make, just as those people who live in the private rented sector or who are buying their own properties make such decisions. The labour market is constantly evolving. From a practical point of view, the exemption would be unworkable.
	Proposed new paragraph (b), which would be inserted by Amendment 13, would appear to ensure that claimants are not forced to downsize against their will. The amendment would achieve that, but in practice it would go even further. It would enable claimants to block relocations by their landlord regardless of the circumstances. It is unusual for a social landlord to relocate a tenant without their consent, but they can do so in some circumstances, such as where they plan to redevelop the area. We do not intend to interfere in the relationship between landlord and tenant, and nothing in our legislation would force a tenant to move against their will.
	On the size criteria measure, we are not seeking to force people to move, but we are asking people to consider the affordability of their accommodation where it is larger than they require, and I beg the noble Baroness, Lady Turner, to withdraw her amendment.
	On Amendment 14ZA, which was tabled by the noble Lord, Lord McKenzie, I have set out our intention to increase the DHP budget with the specific aim of helping foster carers as well as disabled people in adapted accommodation. We very much value the work done by foster carers who care for and welcome children into their homes. That is why the benefit system already treats them more favourably by not taking those children, and, as a result, any fostering allowances, into account in their assessment. However, we recognise that there might be circumstances in which a reduction in the housing element of their benefit might act as a disincentive to fostering, and in such circumstances a local authority will have additional funds to award a DHP.
	I should make the point here that local authorities will have a direct interest in applying those discretionary funds because they will make a saving by keeping the fostering market open. This is not one of the areas where one worries about discretionary funds being used in other ways; this is an incentive for the local authority. Just to reinforce that natural incentive, we are going to make sure that children's services within local authorities will be made aware of the availability of DHPs and will input locally on their priorities. I know there are many concerns in this area, but I really think that we have closed the circle.
	This amendment seems to go further and would not allow any deduction to the housing element, thereby prohibiting deductions for other income or non-dependant deductions. It also does not cover foster carers who are between placements and who therefore have no income from fostering allowances. The flexibility of DHPs will allow for such circumstances, if it is felt necessary.
	The noble Baroness, Lady Wilkins, raised a point on the JCHR. We have just received that report and will be considering it very closely.
	I consider that we are meeting the needs of this group through the increase to DHPs, and I therefore beg the noble Lord, Lord McKenzie, not to move his amendment.

Baroness Turner of Camden: I thank the Minister for that response. He seems to have made a number of concessions in response to me. He outlined some of the practicalities, which I understand. I intended the amendment to acknowledge that this is a very complex and difficult area. I was seeking to give a certain amount of guidance to the Government about the way in which it should be handled; otherwise a number of people are going to be very badly hurt, and there could be a few human tragedies on the way, which one would not like to have. I accept that the Minister has made a number of concessions this afternoon. This is a very complex area, so I would like to have the opportunity to study it again. It is unlikely that I will come back with this at Third Reading because we have been over the ground fairly comprehensively. In the mean time, I thank the Minister for the concessions that he has made and beg leave to withdraw the amendment.

Amendment 13 withdrawn.
	Amendment 14
	 Moved by Lord Best
	14: Clause 11, page 5, line 21, at end insert-
	"(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom."
	Amendment 14ZZA (to Amendment 14)
	 Moved by Lord McKenzie of Luton
	14ZZA: Clause 11, line 3, after "provider of social housing" insert ", and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available"

Lord Geddes: My Lords, since this is a manuscript amendment, it might be of assistance to the House if I read it.
	"In Clause 11, line 3, after 'provider of social housing' insert ', and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available'".
	Amendment 14ZZA agreed.
	Amendment 14, as amended, agreed.
	Amendment 14ZA not moved.
	Amendment 14A
	 Moved by Lord McKenzie of Luton
	14A: Clause 11, page 5, line 23, at end insert "including mortgage interest"

Lord McKenzie of Luton: My Lords, the amendment deals with mortgage interest relief. When we raised this issue in Committee, the Minister told us that it was actively under review. We have now had a chance to see the results of that review with the publication this month of a call for evidence on support with mortgage interest and we have some concerns about what it contains.
	The main proposals outlined include placing a charge on the property of any long-term claimant of mortgage interest support, which, with an additional sum for interest and an administration fee, would be recouped on the sale of that property; paying the support directly to the claimant rather than to the lender as at present; introducing a zero-earnings rule for eligibility for mortgage interest support to prevent in-work claimants on universal credit from qualifying; and extending the current two-year restriction for JSA claimants on claiming support for mortgage interest to those previously entitled to some transitional protection.
	The Government's stated rationale for the changes is, once again, to encourage claimants into work. The document states:
	"A core aim of Universal Credit is that working age claimants have strong incentives to take up work in order to maintain their choice of housing tenure".
	However, the proposals to place a charge on the property of MIS recipients at present apply only to those who are not expected to move back into work-those who, in the words of the call for evidence,
	"need long-term help with their mortgages because they are disabled or have retired with outstanding mortgage liabilities",
	and whom, the document states, it is not fair for the taxpayer to support indefinitely. Perhaps the Minister in his response could outline the key rationale for these changes. Are they intended to ensure that anyone who wants to remain in their home must move into work? Or are they intended primarily as a cost-saving measure? What are the expected savings from the scheme to put a charge on the property, and how do these compare to the potential added expenditure on housing benefit if people decide that they would rather not pay this charge and move into the private rented sector?
	On direct payments to lenders, we have had significant representations from landlords who are worried about the impact of direct payments to tenants of housing benefit-we discussed this in Committee on a number of occasions and will discuss it again shortly. The Council of Mortgage lenders seems similarly concerned about these proposals, with its director, Paul Smee, stating that,
	"the principle of paying the benefit to claimants rather than lenders is dangerous in terms of potentially reducing its effectiveness in meeting its intended purpose".
	Could the Minister let us know what discussions he has so far had with lenders about these proposals?
	The Minister will doubtless say that the proposals in this document are out for consultation-that is, they are just that: proposals-and that he will consider views on them. Perhaps he could therefore let us know the expected timetable for any changes to support with mortgage interest payments. It would be particularly useful to know when he intends to make decisions about eligibility for this support under universal credit, as the level of support provided will make a significant difference to whether work pays for home owners.
	We look forward to further detail on these measures, but it would be extremely helpful if the Minister could take a moment to outline the principles behind them and the expected timescale for their introduction. I beg to move.

Lord Freud: My Lords, I thank the noble Lord for this opportunity to debate the way in which we will provide help with mortgage costs alongside, or as part of, universal credit. As I have said previously, housing support is critical to the success of universal credit. It will recognise that people need support across a range of different tenure types whether they live in the private rented sector or the social sector, or whether they are owner-occupiers.
	Noble Lords will have seen the illustrative regulations on the universal credit housing element which set out our broad approach to support for housing costs. The regulations will indeed make provision for help towards mortgage interest payments.
	I also mentioned in Committee that we would be consulting on possible future reforms of the support for mortgage interest rules. As the noble Lord pointed out, we published not a consultation but a call for evidence on 6 December which contained a number of ideas on simplifying the help provided towards mortgage interest payments for working age and pensioner home owners. One of the reasons that it is a call for evidence and not a consultation is that there are much less backing data in terms of impact assessments around a call for evidence than a consultation. Therefore the noble Lord will forgive me if I do not supply the answers to some of the questions he asked me. That is the difference in the process.
	We intend to provide support for owner-occupiers, as the call for evidence makes clear, whether this sits inside or outside of universal credit and pension credit. The call for evidence seeks views to help inform the appropriate way forward in determining how financial support towards mortgage interest costs should be changed in both the shorter term and longer term. We are looking at a different model to deal with the longer-term costs of supporting home owners. Essentially, we are looking for a way in which we can keep people in their homes when it is long term, but not at an exorbitant, open-ended cost to the taxpayer. That is the point of exploring these issues: we want to make sure that it delivers fairness to taxpayers.
	For support for mortgage interest, we intend to have a rule that provides that help with mortgage costs will stop once a claimant starts work, as is broadly the case now. We believe that the position of claimants with mortgages is different from that of tenants. Owner-occupier claimants have been in work-clearly lenders would not advance money for house purchase unless the borrower could service that debt through income from work. If owner-occupiers are to be able to service their mortgage debt in the future, then they need to return to full-time work and our proposals, or our evidence call, reflect this reality.
	The call for evidence runs for 12 weeks until 27 February 2012 and we will of course consider carefully the responses, whether from the CML or anyone else-noble Lords are welcome to add their views, at which I shall look with great interest-and, based on those responses, we will then develop our detailed policy proposals. I can assure the House that we are continuing to provide help with mortgage interest costs. With that assurance, I hope the noble Lord will withdraw the amendment.

Lord McKenzie of Luton: I am grateful to the Minister for that reply. I certainly do not intend to press the amendment. As he explained, this is very much work in progress. Can he say a little more about the reactions to date-particularly from the Council of Mortgage Lenders-in respect of the direct payment issue.

Lord Freud: To be absolutely honest, I have talked to the CML about this matter but I have not had a direct conversation with it since we issued the call for evidence. One of the reasons we had that as one of the questions is specifically to get a considered view from it as to how that might work.
	There are a number of issues. At the moment, we pay a fixed rate for everyone based on the average mortgage. The Council of Mortgage Lenders has said in the past that it prefers the actual amounts. So there are a lot of issues. It is administratively complex. I know I am telling the noble Lord things he already knows because he was in situ while some of this was being developed. There is a nest of complicated issues. We are trying to flesh this out in the next few months.

Lord McKenzie of Luton: I am grateful for that further clarification and beg leave to withdraw the amendment.
	Amendment 14A withdrawn.
	Amendment 15
	 Moved by Baroness Hollis of Heigham
	15: Clause 11, page 5, line 23, at end insert-
	"(4A) Regulations shall provide for a relevant change in circumstances to include a change in the claimant's actual rent."

Baroness Hollis of Heigham: Amendment 15 is a simple, genuinely probing amendment to get further clarity on the draft regs, given that they have now been published. Currently, a claimant's housing benefit entitlement is reviewed on the anniversary of the claim or when there has been a material change of circumstances. The normal review would be 1 April annually. At the moment, if the rent is raised by the landlord between these annual reviews, the tenant must report this to the local authority as a material change of circumstances. Usually, although not always, the housing benefit would be raised to cover it. Under the new system, if the claimant's tenancy is renewed and the rent increases at any point after April, then even though the rent would still be within the local housing allowance or the housing benefit cap, the claimant's housing benefit will not be adjusted until the following April. It means, in other words, that they could go for 11 months with not enough housing benefit to cover their rent, even though they are entitled to it, and even though they would have got the full year's increase in HB had the rent increase occurred a month before. Because of the timing of the accidents-of the rent increases, in other words-a tenant and his family could face real shortfalls and potential hardships: rent arrears and possible homelessness, with the usual problems that would result.
	This amendment would require an increase in rent to be considered a relevant change in circumstance, which would be a simple way to avoid any potential hardship. It would ensure that housing benefit would continue to be reviewed in the light of a rent rise, as has occurred in the past. I am hoping that the noble Lord can give us that assurance.
	Although Amendment 16 is on a different topic, I have grouped the two amendments to avoid going on for too long. In Committee, I ran an amendment because I was worried about the increased deduction that would come from housing benefit if a middle-aged couple had their adult son-a non-dependant adult, in the jargon-living at home with them. We noted then that the couple could face all of their housing benefit being wiped out because a son over the age of 18, who is perhaps on modest earnings, would be expected to contribute up to £90 a week. No deductions, of course, are made if he is in full-time education or on JSA. If he is in a minimum wage job, his parents could face losing virtually all their housing benefit, as he is expected to pay for his parents' rent himself, even though he is not the tenant and even though he has no security of tenure. We feared either that he would drop out of work for their mutual financial advantage or that his parents might propose that he leave home and find a small place of his own to save their housing benefit, while leaving his parents underoccupying and being fined with a cut in their HB in turn. Either way, the family is damaged. Obviously the most satisfactory option would be for him to live at home, make the best use of the housing space and contribute-though not unreasonably so-to their housing costs. But can he do so if that is the sensible choice?
	I have some questions for the Minister. In future, will the son, as a non-dependant, be counted as part of the household when DWP works out the space that the family are entitled to have for their HB? I would love to think that the amendment we have just passed has made that question redundant-touch wood that it has. As a couple, in future, will his parents be deemed to be underoccupying by one bedroom because of their adult son? Hopefully-touch wood-that question may now be redundant. However, there is a problem of the interplay of underoccupation and adult non-dependant deductions which the family could face. The Minister recognised this when we talked about it in Committee. He said:
	"We need to look at the treatment of non-dependants ... Furthermore, we need to ensure that there is some sensible fit with the provisions for underoccupancy ... We want a scheme that provides incentives for tenant and non-dependants to work and at the same time preserve incentives for households to stay together".-[Official Report, 20/10/11; col. GC113.]
	The Minister was absolutely right. Could he clarify what his intentions would be in that situation? I beg to move.

Lord McKenzie of Luton: My Lords, I shall be brief, because it is very rarely possible to add to something that my noble friend has said in moving an amendment. However, I will try in two respects.
	Amendment 15 deals with a relevant change in circumstances. How would that feed through into changes of circumstances that may impact on transitional relief for universal credit? Would a change in rent level support be a change of circumstance that would have to be taken into account?
	As for non-dependant deductions, under existing arrangements there are a range of circumstances whereby people who might be treated as non-dependants are not and where some non-dependants do not generate a deduction under the provisions. For example, in respect of the latter, no deduction is made in respect of any non-dependant who is staying with someone but whose normal home is elsewhere, who is receiving a training allowance in connection with youth training under specific provisions or is a full-time student during his or her period of study or is in hospital for more than 52 weeks. There are those sorts of exemptions. Is it planned that those will be carried forward into the new world of universal credit?

Lord Freud: My Lords, local housing allowance rates are set each year at the anniversary date of the claim. In many cases, they coincide with claimants' annual rent increases, but as the noble Baroness, Lady Hollis, will recall, during the LHA pathfinder some landlords increased rents mid-year to take advantage of increasing LHA rates. That is why we will operate a common uprating date of 1 April.
	I would like to consider this matter further. I do not believe that it is appropriate to provide regulations in the Bill, and we will have an opportunity to debate the regulations in this area. However, I can assure the noble Baroness that we will consider the implications of a common uprating date for this group of claimants as part of the continuing work on the treatment of change of circumstances in universal credit. I am not able to get to a conclusion on what we define as a change of circumstances. Again, it is an interconnected group of things. On the basis that I am working on it, I hope that the noble Baroness will agree to withdraw the amendment.
	The next area is on non-dependants. We debated a similar amendment in Committee, and I remember blushing with pride when the noble Baroness said that I made an intelligent response. It is a rare accolade that I get from some members of the opposite Benches, but not all.

Lord Brooke of Sutton Mandeville: The noble Baroness was even more generous. She actually described it as a "very intelligent response".

Lord Freud: I thought that I would be self-deprecating and leave the "very" out.
	The noble Baroness asked me to keep the House briefed on the thinking here and return at Report. The best that I can do now is to say that we have not changed our views. There is a lot of active work, and I know that the noble Baroness, Lady Meacher, also took a great deal of interest in this issue. The universal credit will recognise the general principle that adults who live in the household of people getting help with their housing costs should expect to make a contribution towards those costs. Not to do so would, in effect, mean that taxpayers would subsidise non-dependants through the benefits system. I think that that is common ground around the House.
	It is also common ground that a reformed welfare system must make work in comparison to dependency benefits pay and be seen to be paid, and the current treatment of non-dependants can work against employment incentives for both the claimant and non-dependant. As I said, there are various factors that we have to juggle between decisions on non-dependants-the "touch wood" factor, taking in a lodger, and so on. These factors mean that the issue of non-dependants is complex.
	I accept that the amendment is a probing one, but it would not work. However, we are considering it in detail, and it is an important area. It really goes to the heart of the simplicity agenda that we have, and I hope that as we flesh out the detail noble Lords will have something to which the expression "very intelligent" remains applicable. On that basis, I ask the noble Baroness to withdraw her amendment.

Baroness Hollis of Heigham: I am happy to withdraw my amendment. I absolutely understand that this is a work in progress, but we now have the draft regulations, which we did not have in Committee, which is why we are trying to probe to see where this goes. The problem could be that, were it not for the earlier amendment being passed, a couple in a two-bedroom place with an adult son could be regarded as underoccupied if the adult son was not counted as eligible for the room, whereupon their housing benefit would be cut-but, because he was in the House, he would be expected to cover not just their housing benefit but the cut as well. It is that Catch-22 situation that I am seeking to avoid.
	It is not straightforward, and I understand that. I am grateful for the Minister's response. I look forward to an appropriate, acceptable and welcome solution to these dilemmas. I beg leave to withdraw the amendment.
	Amendment 15 withdrawn.
	Amendment 16 not moved.
	Amendment 17
	 Moved by Baroness Hollis of Heigham
	17: Clause 11, page 5, line 23, at end insert-
	"(4A) Regulations shall provide for-
	(a) the frequency with which reviews of the relationship between increases in the rental market and the CPI will be conducted;
	(b) the circumstances in which increases in the rental market and CPI will be deemed to have diverged;
	(c) the circumstances in which there will be considered to be a critical lack of affordable housing;
	(d) the circumstances in which this will lead to a change in the method used to uprate the housing component of universal credit."

Baroness Hollis of Heigham: I have a series of amendments on housing. This amendment calls for periodic reviews of the interconnection between CPI and rent levels. This is an issue that has concerned the whole House at different stages, including on the CSR Statement as well as in Committee.
	We know now that the proposed deficit reduction programme, according to the Chief Secretary, will extend for a further two years at least beyond the general election. This amendment now takes on the added urgency that perhaps did not exist at the time when we discussed it in Committee. Local housing allowance, which I will call housing benefit, in the private rented sector is based on the 50th percentile of private rents, which should mean that half of all private rents are affordable on HB and half are not. It is a median. The HB, in other words, covers the average rent. We also know that the Government are reducing that 50th percentile to the 30th percentile, which means that 70 per cent of properties would be unaffordable but 30 per cent should still be so. We have argued that and resisted it, but the Government have insisted on their proposals. That is bad enough and will make it much harder to find a private rented home. But, in addition, HB to cover your rents up to the 30th percentile will rise only by CPI, not by the actual increase in private sector rents. Yet according to Savills rents are rising at the moment by more than 7 per cent a year, and CPI is only half of that-not this year but we expect it to be. Rents are rising on average at double the rate of CPI, mainly because of additional demand for private flats from young people for whom originally the flat would have been a transit tenure but who now stay there while they seek to save their deposit for a home of their own.
	The Minister used to argue that capping HB would drive down rents. That is not happening, nor will it, because no longer do landlords have to let to HB tenants. Just as there are eight people after every job, there are eight tenants after most lets. HB tenants will get only what no one else will take: the substandard, the squalid and the downright unsafe. Any complaints and you are evicted after six months. Tenants will be forced into poorer and poorer accommodation. Worse, as I say, rents are rising at double the rate of CPI, so whereas now your HB may theoretically cover 30 per cent of available rents, in three years' time it may cover only 20 per cent, and in five years only 15 per cent. In more expensive towns such as Winchester, it is estimated that there will be nothing available to rent for anyone on HB within the next few years.
	This amendment is very simple. It requires that the Government's original policy intent-that HB in the private sector will allow the tenant the choice of the bottom 30 per cent of properties-continues to be respected and that the widening gap between the CPI uplift in HB and the actual rise in private rents does not invalidate the Government's intentions. In other words, this amendment simply asks the Government to ensure that they do what they say they want to do-no more, no less-and that we keep clear the policy intent, and that it is delivered.
	In the past, the Minister has decorously brushed this aside by saying that it is outside the CSR period, but given the Chief Secretary's remarks, it is not any more. He also helpfully said in Committee on 20 October that,
	"if local housing allowance rates are clearly out of step with rents, they can be reconsidered".-[Official Report, 20/10/11; col. GC 146.].
	It would be very helpful to know how this would be done, given the vagueness of the draft regulations. The Government should confirm whether reviewing the operating method will occur periodically or, if not, what will trigger it. This amendment seeks to get greater clarity in the regulations in order to protect the Government's own policy intent: that 30 per cent or so of private lettings should be affordable and available to those on local housing allowance. I beg to move.

Baroness Meacher: My Lords, I support Amendment 17, to which I added my name. As always, the noble Baroness, Lady Hollis, has comprehensively covered the issues and I will therefore take only a few moments of your Lordships' time to express my personal concerns about the issue.
	The Government have a policy to reduce over time the percentage of GDP paid out in benefits to those on low incomes and those out of work. Perhaps the main mechanisms by which this will be achieved, though by no means the only ones, are the range of housing allowance controls to which the noble Baroness referred and the linking of housing allowance to the CPI, rather than to the rate of increase of rents themselves. The problem I have with the CPI link in particular, along with all the other controls, is that it is beyond the control of government how this plays out; hence the importance of these monitoring mechanisms that the noble Baroness has spelt out.
	For example, if the euro collapses-it seems ever more likely that it may-and we have several years of recession or, indeed, deep depression with falling prices, do the Government have any idea how rents will respond in that situation? Because of the pressures of a growing population with more and more single-person households, as well as the limited stock of properties, particularly in London and the south-east, it is possible that rents may remain static, or even rise in the south-east, while other prices are falling. The Government assume that the downward pressure on housing allowances will ensure that in fact rents fall as well, but I am not at all confident about that. There is a huge private rented sector out there and as fewer young people can afford to buy, more and more of them will indeed move into that rented sector.
	A very different scenario will be that once the years of fiscal tightening are over inflation could return with a vengeance, leaving a soaring gap between the RPI and the CPI-the prices claimants will have to pay in the shops on the one hand, and the CPI which will determine their housing allowance levels on the other. Of course, all these uncertainties will be there alongside a benefits cap, which may or may not be inflation-proof, and the need for many vulnerable people to adjust to a move from higher ESA to lower-level JSA. The Minister knows that I fear many vulnerable people will be included within that group, going down the slope towards the cheaper JSA. There is also the loss of disability benefits for children, the loss of tax credits and so forth, and the move to monthly payments if we cannot persuade the Minister that this will be the last thing that people are going to cope with. For all these reasons, I agree with the noble Baroness, Lady Hollis, that the House needs some assurance that there will be systematic and regular monitoring of the consequences of linking rents to CPI and on how the situation will be assessed and in what circumstances a change of policy would be regarded as appropriate.
	I would also be grateful if the Minister could inform the House on a particular aspect of this issue. Shelter and the Chartered Institute of Housing estimate that the link between local housing allowances and the CPI will, by 2030, result in 60 per cent of local authority areas being unaffordable for LHA claimants. Undoubtedly, these will be the areas with jobs. Can the Minister say whether the Government accept this estimate and, if not, what the Government's estimate is? Whether or not he accepts the estimate, has the DWP undertaken an impact assessment of the housing allowances/CPI link on employment in this country? What particular impact on employment will this have?
	If households have no option but to move to areas with very few employment opportunities, how much higher will unemployment be year on year than would otherwise be the case and what will be the costs of that higher unemployment for the taxpayer? These sorts of issues need to be incorporated within the ongoing monitoring and assessments of the impact of these policies, year by year. Within the Minister's response to this amendment, I would be most grateful if he could include some reference to the employment impact.

Lord Freud: Noble Lords will be aware that we propose to limit increasing the local housing allowance in line with the CPI index from April 2013. The aim here is to ensure that we continue to exert downward pressure on rents while looking at rent levels in local markets. The limit will apply only in areas where local market rent increases, at the 30th percentile, exceed the annual rate of CPI inflation. We have said that we are committed to making savings from this measure up to 2014-15. If it then becomes apparent that local allowance rates and rents are out of step, they can be reconsidered.
	To prepare for this change, the Minister for Pensions set out in the uprating Statement the arrangements for fixing rates. The first uprating will be in April 2013. We have taken this step to ensure that CPI rating can commence from April 2013, but that nobody will see their ongoing award fall at that point as a result of LHA rates being uprated. As the annual rates will be set well in advance, we will be able to provide clarity and certainty to claimants and landlords. We will continue to monitor the path of market rents until 2015 and the Secretary of State will be able to review the LHA rate, or uprate it by some other method, should the need arise.
	As the noble Baroness, Lady Meacher, pointed out, the future is uncertain. Clearly, you can draw any scenario you like; the point is that we need to watch it and we will watch it very closely. In particular, we may need to increase LHA rates if growth in rents and the CPI are so out of sync that there is a critical lack of affordable housing. To pick up on the noble Baroness's other point on extrapolating out to 2013, clearly we all recognise that over any kind of longer-term run rents tends to move with average earnings, not with average prices. Any extrapolation out that long will have a big gap, but we are not talking about that here. We are talking about a measure which is locked in for that two-year period at a time of great difficulty when we are trying to bear down on prices. Therefore, I do not think it is relevant for me to hypothesise about employment levels. That is not what is happening here.
	On the point about data and monitoring and what Parliament can expect from us, we will provide to Parliament on an annual basis from late 2012 the relevant CPI data and the data on the 30th percentile of market rents. In addition, noble Lords should be aware that the Valuation Office Agency currently makes available quarterly data on market rents by local authority.
	I should point to the major piece of independent external research that is already underway to evaluate the impact of the reforms to housing benefit announced at the June Budget and the spending review. Indeed, I need to thank the noble Lord, Lord Best, for the way that he shaped that research effort. The research will be comprehensive and will be presented to both Houses and the public alongside a ministerial Statement. The department is currently considering how this research could be extended-subject, of course, to funding-to allow it to look at the impacts of changes to local housing allowance uprating over a longer period.
	I hope that I have reassured noble Lords that we are committed to monitoring and evaluating this change really thoroughly. On that basis, I urge the noble Baroness to withdraw her amendment.

Baroness Hollis of Heigham: I am grateful to the noble Baroness, Lady Meacher, for her support and her additional probing and questions. I am more than satisfied with the Minister's reply, apart from one word. I wonder whether I could invite him to change that one word. He said that if the two tests, rent levels and CPI, are out of step, then they "can be reconsidered". I want "will be reconsidered". I invite the Minister to strengthen his position on that point. Everything else was lovely.

Lord Freud: On the basis that the noble Baroness is going to be incredibly helpful to me in all the consequent amendments in the Bill, I will change the word from "can" to "will".

Baroness Hollis of Heigham: I am very grateful and with great pleasure withdraw the amendment, knowing that our policy intent and the Government's policy intent will now be met. Thank you.
	Amendment 17 withdrawn.
	Amendment 17A
	 Moved by Lord McKenzie of Luton
	17A: Clause 11, page 5, line 23, at end insert-
	"(4A) Regulations shall not permit any reduction of housing benefit or amounts included for accommodation in an award of universal credit in respect of under occupation, deemed or actual where-
	(a) the landlord is local authority or registered provider of social housing, and
	(b) any such landlord is not able to offer suitable alternative accommodation which would not cause a person to under occupy.
	(4B) Regulations may make provision for determining when accommodation is suitable for the purposes of these provisions."

Baroness Anelay of St Johns: My Lords, first, may I ask a question of the Opposition at this point? There has been no claim that this amendment is consequential, and it clearly is not consequential. I say so in a spirit of wishing to elucidate information and explanation from the Opposition, and it is not necessarily overtly hostile, because the Opposition are looking rather puzzled. The Opposition have not at any time said that this is consequential. It is the view of the Government, on advice, that something that refers to regulations is so clearly not consequential upon the earlier loss.
	I wonder if the noble Lord could say, for the benefit of the House and before the Minister is able to take a decision, why he considers it to be consequential.

Lord McKenzie of Luton: My Lords, I do not believe I considered it to be consequential, but I believe that we debated it as part of that first group. We had a wide group, of which this was part. I was not anxious to revisit that debate. If the noble Baroness insists that we do, perhaps we could set aside another couple of hours to do that.

Baroness Anelay of St Johns: My Lords, I shall respond in the same helpful measure. I am grateful to the noble Lord. The Chair put this as moved formally; that was the improper thing. I hasten to add that I know that the Chair was not trying to be improper.
	Of course, I have to put on record that this is a separate matter. If the Opposition wish to press this to a Division, that is their absolute right, and I recognise that. However, the Government cannot accept Amendment 17A because it is not consequential, and the Minister clearly has not accepted it. I hope that that is an explanation which is a little clearer than mud.

Baroness Hollis of Heigham: My Lords, I am sorry to press this, but I understood that when the noble Lord, Lord Best, moved his original amendment, he accepted the additional amendments in the group as amendments to his amendment. He did this to ensure that his original intent regarding the one spare bedroom was modified by the extent to which there was available accommodation. If there was not, his standard would apply, but if there was, we would expect the tenant in due course to move. That was the debate.

Baroness Anelay of St Johns: May I very rudely interrupt the noble Baroness, Lady Hollis? I am reminded, of course, by those who know the rules well, that if we are to debate this amendment-which we are, albeit very briefly-it is right that the noble Lord, Lord McKenzie, should move it. I will, of course, be able in procedural terms to reply to the noble Baroness, Lady Hollis, and explain the position. However, perhaps the noble Lord, Lord McKenzie, for the sake of the formalities, might quickly like to move the amendment, and then we can deal with the process.

Lord McKenzie of Luton: If it has not been moved already, then I beg to move.

Baroness Hollis of Heigham: My Lords, my case then stands, in other words. I had understood that when the noble Lord, Lord McKenzie, spoke immediately after the noble Lord, Lord Best, he moved the additional amendments, which the noble Lord, Lord Best, had previously indicated he would accept as part of the position.

Baroness Anelay of St Johns: My Lords, I know that this is becoming an aficionado's debate, and obviously we have to make sure that we understand what is going on.
	The noble Lord, Lord Best, made claims about what he considered to be consequential, and I know that he did so in good faith. However, it is not for the noble Lord, Lord Best, to tell the Government what the Government believe is consequential. As a matter of fact, Amendment 17A is not consequential. The noble Baroness, Lady Hollis, might find that I am about to be helpful, so she might wish to hesitate for just one moment. At least, the noble Lord, Lord Bassam of Brighton, the Opposition Chief Whip, might find that I am about to be a little more helpful.
	Clearly this is not a consequential amendment. The noble Lord, Lord Best, may want to accept it as such, but it is not procedurally. The Government's view, if I can make it clear, is that the amendment is not consequential. We do not accept it as being consequential, and will not do so when these matters are debated in another place.
	However, the Government have also seen the result earlier on. It is not the Government's intention to try to unpick some of the debate that occurred earlier. During that debate, at no time did the Minister accept that Amendment 17A was consequential. The position is clearly that when the matter was debated earlier on, other noble Lords felt that if the matter were put to a vote, they might wish to vote along the same basis, but that did not happen.
	I am sure it will be to the confusion of noble Lords opposite, but the position, quite simply, is that the Government will not call against Amendment 17A when it is put. I hope that is helpful. The important thing is on the record; I make it clear that the Government will not accept this in another place. I hope the noble Lord, Lord Bassam, finds that useful.

Lord Bassam of Brighton: My Lords, I was waiting for those words, and that is why I had not made a procedural intervention. Having now heard what the noble Baroness has said, I will be content, for the orderly process of business, if the Government accept this. Of course, that is on the understanding that what happens in another place is what happens in another place. No doubt these things will be revisited upon us, as they usually are.

Baroness Anelay of St Johns: My Lords, for the avoidance of doubt, as I say, the Government do not accept the amendment. I will certainly ask my colleagues behind me-including the Minister, who must be wondering what on earth this is all about-that when the Question is put, no person on the coalition Benches calls against it.

Lord McKenzie of Luton: In which case, I think that all I need to do is to say, I beg to move.
	Amendment 17A agreed.
	Amendment 18 not moved.
	Amendment 19
	 Moved by Baroness Hollis of Heigham
	19: Clause 11, page 5, line 29, at end insert-
	"(6) Regulations shall provide that where the award for housing costs is restricted to the shared accommodation rate, this shall not apply for a period of 52 weeks for any claimant aged between 25 years and 35 years, who is not an existing claimant of housing benefit."

Baroness Hollis of Heigham: I would like to continue the argument with the Chief Whip, but we will move on. Perhaps we will have this discussion outside on the difference between consequential, and the mover of an amendment accepting an amendment to the amendment. That is where the confusion may arise. The noble Lord, Lord Best, certainly did do so.
	We discussed shared accommodation rent in Committee, and I have to say that one's worries remain. At the moment, if you are under 25, you are eligible for Housing Benefit for a room in a shared house. If you are over 25, you are eligible for Housing Benefit for a one-bedroom flat. The Government are proposing that from next month, if you are aged up to 35 rather than 25, after 13 weeks you will get housing benefit only for a room in a shared house, a house in multiple occupation. Some 62,500 people will be affected, losing on average over £40 a week-in London, over £100 a week.
	The amendment is a modest one, a breathing-space amendment. It does not seek to maintain the status quo, though I wish that we could do so. Who is this breathing space for? Say that you are 33. You moved a couple of years ago to a large city and still do not know too many people. You are living in a one-bedroom flat and are in work as a secretary. You have not built up many savings but are not claiming HB. Because your small company closes, you lose your job, but the amendment would stop you from losing your home as well. Instead, you would receive housing benefit for your one-bedroom flat for a breathing space of 12 months while you look for another job.
	Without the amendment, the person I am describing would be forced-in London, for example-to lose her one-bedroom flat and go into a house of multiple occupation because of the cost of £100 a week that she could not cover herself, yet 50 per cent of people on JSA like her return to work within six months, 75 per cent within nine months and 90 per cent within the year. The amendment would allow her to keep her flat with housing benefit for that breathing space of one year. If after that she had not returned to work, she would fall down to the shared-room rent and have to find somewhere else to live.
	Why the argument for a breathing space? There are two reasons. The first is the upheaval factor. She would avoid a move out and then possibly, if she found work six months later, another move into a one-bedroom flat, each time spending perhaps thousands of pounds on curtains, carpets, a removal van, agency fees, deposits and the like.
	It is not just about cost, even though that will be wiped out of her savings-it is about stress. Having lost her job, she is desperate to get another one and should not have to worry about whether or not she is going to have a home. In any case, she needs to stay in the local area. As we know, very few jobs go through Jobcentre Plus; most go through knowing people who know of vacancies as they occur.
	If she loses her home, instead of focusing on searching for a job, she will be focusing on the search for a home. She has to; that comes first. Otherwise the choice is potentially a night hostel and, ultimately, a park bench. She will be stressed and pressured, and the strain for any of us in that situation without resources would be almost unbearable. She would be changing address, putting stuff in store, sorting out utilities, finding cash for a deposit and agency fees-all the clutter of an unwanted house move, at just the time when we want her to be focusing on the search for a job. Let her concentrate on getting the job; it is what she wants. If she gets one, she will soon be off housing benefit altogether and paying taxes on her salary, saving the state a long-term HB bill. It is in her and our interest to give her that breathing space of a year. I have calculated that within a year the amendment would save the Government more than they think they will gain from cuts to the group in her situation, because people like her will be off benefit and back to work sooner.
	So the first reason for a breathing space is for her to focus on a job search, which is what will actually cut the benefit bill. The second reason is the type of accommodation that she would have to move to. If she is lucky, she may have friends with whom she can share or sofa-surf, having put all her furniture in store. If not, she will have to move to an HMO. The ones that you can afford on benefit are at the bottom end of the market because landlords prefer students or people in work. That, combined with the effect of the 30th of a percentile on benefit payable, means cracked WCs, trailing wires, missing light bulbs, flimsy doors, stained carpets, indifferent landlords and dirty common parts in the kitchen and hall-and if she complains, she will be evicted.
	If she is fairly lucky, she will find that she can share with some other like-minded women, but few women are in HMOs because they are neither safe nor salubrious. She will instead have a room in a shared house with strangers, sharing the kitchen and bathroom, at night walking down the hall to the bathroom in her dressing gown, hoping that she will not be accosted or assaulted. She will hear every sound through partition walls, protected only by a flimsy plywood door to her bedroom.
	With whom will she be sharing? Most landlords can make HMOs work only with four tenants or more, usually unknown to each other. With luck, they may simply be younger men of student age, noisy, boisterous, boozy, chaotic, undomesticated, helping themselves to whatever is in the fridge and holding late-night parties with loud music. However, students in that situation would be able to afford something better, so instead she faces the much higher likelihood of sharing with other strangers-older men who have nowhere else to live.
	It is mainly older men who live in HMOs. Why is that? I speak as someone who, as local authority leader and housing chair, tried to regulate them. Those men are in HMOs because they have been thrown out of the family home for violence; because they are ex-offenders, addicts or alcoholics; because they have been evicted from their previous flat for antisocial behaviour; because they have mental health problems; because they have substantial learning difficulties; because they have come off the streets from sleeping rough; or because they are dealing, and their so-called friends crowd into the kitchen to buy and consume. They knock on her door by mistake, perhaps shout at her through it, and she is terrified. Most men in that position could defend themselves; she cannot.
	I fear that HMOs at the bottom of the housing market are warehouses for the marginal, the deviant and the drifter. We are requiring this woman, having lost her job through no fault of her own, to join them. The journey back to work will take far longer and be far harder for her as a result of what we have done. No woman in this House would want to be in this situation and no man would want it for his daughter, and if it is not good enough for us it is not good enough for her.
	If I can show the Minister, as I am happy to, that the amendment would be at least cost-neutral and would probably give additional savings-I have worked the permutations on different possibilities-will he please take it away and think about it again? I am happy to share my financial figures with him now, later or in my wind-up. If I can show him that he will not make any losses on the amendment but it will either be cost-neutral or even make some surplus, will he offer to take it away and think about it?

Baroness Meacher: My Lords, I support Amendment 19. I have particular concerns. I fully endorse the point made by the noble Baroness, Lady Hollis, that when people lose their job it is unacceptable for them immediately to face not only the shock of being unemployed and the dramatic fall in their incomes but the prospect of having to move their home. Psychologists always say that it is important to avoid changing more than one of our three mainstays of security in any one year: employment, our main relationship and our home. The risks of mental health problems rise significantly if we do so, as the noble Baroness illustrated very well.
	There is therefore a strong case for allowing newly unemployed people time to adjust before they have to think of moving home. Of course the hope would be that they would find work within that year and never have to move at all. I want to raise again a particular problem that to some degree would be assisted by the amendment. I raised this issue in my most helpful meeting with the Minister but have reason to believe that his assurances would not work as he thinks they would. The issue is that of people with severe mental health problems who may be absolutely unable to move into shared accommodation, either because they themselves could not handle having someone else around or because the situation would be untenable if not downright dangerous for anyone else trying to live with them. The Minister assured me that discretionary housing payments should deal with this problem. Perhaps in theory this might be the case, but apparently in practice it does not in fact work. Does the Minister regard it as right for sick people to be penalised when for therapeutic reasons they cannot move into a living space with someone else?
	I have a couple of examples to illustrate the point. A woman in her early 30s, living alone in private rented accommodation, receives ESA because of her mental health condition. She already has rent arrears as her housing benefit does not cover her rent. She applied for a discretionary housing payment but this has been refused. She has now been told that her housing benefit will be cut further, of course, in January 2012, when she is only entitled to the shared accommodation rate. She finds it difficult to cope with other people, and could not cope with a shared flat, even if she could find one. The adviser who is dealing with her fears that she could become homeless.
	The other example is of a woman in her early thirties with HIV and related health difficulties, including depression. She is regarded as being unlikely to receive a discretionary housing payment until she is 35. I do not know why, but that is what I am told. She comes from a traumatic background, needs regular access to her many medications, and to the bathroom. She is not regarded as someone who could cope with shared accommodation: again, a likely homeless person.
	If these claimants finish up on the streets, they will no doubt end up on one of our hospital wards at a cost of £261 per day, £95,000 per year to the taxpayer. I realise that this is a cost to the Department of Health, and not to the DWP, but I know the Minister is broadminded on such matters and will not want to cause a massive increase in Department of Health costs. I am serious about it. There might be a saving to the DWP, but a much bigger cost in the Department of Health. However, the noble Baroness, Lady Hollis, does not accept at all that there would even be a cost saving in the DWP. There would therefore be a double whammy. We already see people moving automatically from benefits, to losing benefits, then on to the streets, and then into hospital. That is the way the system works, and this measure will simply make matters worse.
	Apart from the inappropriateness of shared accommodation for some, though not at all every mentally ill person, there is also the practicality of finding such accommodation for this particular group. Someone with a mental health problem is going to be last person many people want to share with. We know that the stigma involved is considerable. People are frightened, and they assume that people are dangerous when in fact they are not at all. But also, in reality, some people have difficult personal assumptions which would make them quite difficult to live with.
	The result is that these people will not find shared accommodation readily, even if they could cope with it, and many absolutely could not. I know many people on our wards whom we could not discharge into shared accommodation. They would simply sit around on the wards, and it would be a problem.
	I have focused on a particular claimant group, but an important one, in view of the numbers of these people. I hope the Minister will be sympathetic to the amendment, for all the reasons the noble Baroness, Lady Hollis, pointed out, but also because it would ameliorate the problem of this particular group of people with mental health problems who, with any luck, might over a year settle down rather further and then might be able to be accommodated within the system.

Baroness Lister of Burtersett: My Lords, I support the amendment tabled by my noble friend Lady Hollis of Heigham. She has painted a vivid and powerful picture of what this means for the people affected. I have sat through and participated in a couple of debates already about this, partly on the regulations, in Grand Committee. The more I have listened and read the evidence, the more uncomfortable I feel about us allowing this measure to go ahead.
	When I was younger, I flat-shared. I answered the ads in Time Out, and it is a very different thing. I am sure that many noble Lords may have been in that position, and think there is nothing wrong in sharing accommodation. But doing it from choice is very different from being pushed into it. As my noble friend has spelt out, we are talking about less salubrious accommodation.
	I am concerned about various groups who are particularly vulnerable here, as we have already heard. When the Social Security Advisory Committee considered this, it talked in particular about the way women will be affected. Women are not disproportionately affected as a group, but those who will be affected could be particularly adversely so.
	There are two groups in particular. Pregnant single women, the advisory committee said, will be restricted to the shared accommodation rate until they give birth. They face one of three undesirable situations. They can move home twice, at a time when they may be financially, emotionally and physically ill-equipped to do so, into shared accommodation, and then back to self-contained accommodation when the baby is born; they can decide to move into shared accommodation and remain there after the birth of their child; or they can try to make up the shortfall in their rent.
	The second group is women fleeing domestic violence. The prospect of having to share with male strangers is particularly daunting for them. Another group we discussed in Committee was those with shared parenting, and we considered how inappropriate it is for their children to be in the kind of accommodation that they have to take in this situation. The Minister did not really address those concerns.
	Finally, I referred in Committee to a letter which had quite an impact on me. It was one that the noble Baroness, Lady Browning, mentioned having received from the mother of a young man on the autistic spectrum, describing the difficulties he faced in shared accommodation. Think about how inappropriate shared accommodation might be for someone with this condition, who may find it very difficult to live with other people or with strangers, who might find it very difficult to live with him too. A lack of understanding of that kind of behaviour could create real tensions. I can see so many problems.
	The Minister responded by talking about the discretionary housing payments. The issue is not just about the amount of money, but also the important point that someone in this situation-and, I suspect people with mental health problems-need security and certainty. Discretionary housing payments do not give that, because you do not know whether you will be able to get the money. That causes more anxiety and could lead to forms of behaviour that could have negative consequences.
	The noble Lord also made the point that there are already exemptions for severely disabled people, but this person did not fall into the exempt category. There is a spectrum of behaviour within which people will not be exempted but could face real problems with the extension of shared accommodation.
	The amendment of the noble Baroness is a way of trying to mitigate those problems, and I endorse what she has said. I hope the Minister will take it away and think about whether, through the amendment or another way, he can address the wide range of concerns that have been expressed three times now-in discussing the regulations, in Grand Committee, and now.

Baroness Hayter of Kentish Town: My Lords, as my noble friend Lady Hollis made clear, this amendment addresses the cases of those who, not having been housing benefit claimants, become in need of this, perhaps through the loss of a job, a change in domestic circumstances, illness or some other unanticipated event. It is aimed at the potential impact on vulnerable young adults: single people between 25 and 35, who rent in the private sector and from January will only be eligible for the single room rate, losing about £40 a week. Crisis-which we all know, particularly at Christmas, of course-an organisation that knows a thing or two about homelessness, believes that most of the 50,000 or more people affected are likely to lose their homes.
	The amendment does not say that these people would be excused the shared room rate up to the age of 35, but it gives them a window of a year in which to find a new home or a job, to get well, or in some way to change their circumstances so that they are no longer dependent on housing benefit. It would extend the current 13-week breathing space to 52.
	This is not just a matter of the individuals concerned sorting out their lives but of allowing the market to respond to these new rules. Research by the University of York on the impact of extending the shared-room accommodation rate found that there is insufficient shared accommodation available at the moment. Indeed, this would risk making such accommodation even harder to find for those aged under 25 as the supply of relevant accommodation takes time to build up. Furthermore, the York study found that sharing can sometimes be difficult or even dangerous, as we have already heard, and can have a serious negative impact on the health and well-being of vulnerable people.
	As we have already heard, there are exemptions to the shared accommodation policy, including those for severely disabled people, care leavers aged under 22, people who have spent more than three months in a homelessness hostel and received resettlement support and those aged over 25 who are considered a risk to others. It does not include those who might themselves be at risk. In Committee the Minister reminded us of the other exemptions, such as those for certain ex-offenders who pose a risk to the public and certain former residents of specialist homeless hostels, which might include those leaving a refuge following domestic violence.
	However, we also heard in Committee of a number of situations in which shared accommodation not covered by those exemptions would pose a real problem for people. My noble friend Lady Sherlock raised the question of single pregnant women, who may find such circumstances particularly difficult. The noble Baroness, Lady Campbell of Surbiton, raised the issue of those with obsessive compulsive disorder, who may also find the prospect particularly difficult. My noble friend Lord McAvoy, who is not in his position at the moment and is, in his own words, not a social liberal, talked about the situation of those with a mental illness and how they might gradually be forced out of successively worse forms of shared accommodation.
	Many of the people caught by this proposed new ruling will be fathers of young children soon after a split, when it is particularly crucial for their relationship with the children to be maintained. If it is not kept close in that first year of separation it is very hard to re-establish it later. That relationship depends not just on shared hamburgers in McDonald's but on cooking, eating and even washing up together. For this, a place of one's own, where young children can feel at home-not a house shared with strangers-will be crucial. The amendment relates to that first 12 months, within which we hope finances, jobs or better accommodation can be sorted out. If it is not sorted out in that 12 months, at least it will be much less threatening for those children visiting their now non-resident parent to get used to a different way of living.
	The amendment does not reverse the intention of the policy, which the Minister told us was to ensure that claimants make similar choices to those not on benefits. The flaw in his argument is that the circumstances of many of those on benefits are not the same as those who can support themselves. The benefits system is designed exactly to protect people when their circumstances change. The amendment provides a little extra support of this kind. It would give people sufficient time either to address the circumstances-whether job loss, illness or a change in family arrangements-that meant they had to claim benefit, or, at a later time, to find the shared accommodation that best meets their needs. It is a thoughtful amendment, which the Opposition are happy to support.

Lord Freud: My Lords, Amendment 19 from the noble Baronesses, Lady Hollis and Lady Meacher, deals with a subject that we have debated at considerable length-the shared accommodation rate. In case there is any doubt, let me be clear: the shared accommodation rate is what we pay people to share accommodation, not to share rooms, as some people think. We do not expect people to share one room or a bedroom, but to share accommodation.

Baroness Hollis of Heigham: My Lords, I do not think anyone disputes that, but at the bottom end of the market it will be a room in a shared house, which means sharing a kitchen and bathroom, as we have discussed.

Lord Freud: My Lords, it is rather interesting to look at the actual rates. If you take two people, each with their own shared accommodation rate of housing benefit, that covers or exceeds the two-bedroom rate in 60 per cent of localities. We are not talking about a dramatic cut in much of the country. Indeed, if three or four people choose to share a house, taking their own shared accommodation rates, the amount of money that they get would cover the rate for three or four-bedroom properties in 90 per cent of localities. We are not talking about a hugely draconian cut in that context.
	If we look at the amendment itself, it is not altogether obvious what rate of housing costs the noble Baronesses are proposing should be paid during the 52-week period of exemption. Since the amendment applies to new claims only, perhaps it seeks to ensure that new claimants have their full contractual rent met for the first 52 weeks, rather than being paid the local housing allowance. If it is the latter, we covered those points in Committee. We debated whether the current 13-week exemption from rent restrictions for claimants who could afford their rent when they first took on that commitment should be extended to 52 weeks.
	I need to make clear that rent can be met in full for up to 13 weeks for those who could afford their rent when they first took on the tenancy and have not been in receipt of housing benefit in the past year. This means that those claimants who experience a short spell of unemployment are not forced to move, and it gives others time to consider their housing options. Around 40 per cent of JSA claimants aged between 25 and 49 have been claiming for less than three months, and around 60 per cent for less than six months. For completeness, I should add that there is a 12-month protection for people who have recently been bereaved.
	As I said at the time, most claims for housing benefit are for short periods. The 13-week exemption protects a person's ability to pay their rent during that time. Half of jobseeker's allowance claimants aged between 18 and 24 have been claiming for less than 13 weeks and less than 5 per cent have been claiming for more than 52 weeks. We already know that more than a third of those who claim housing benefit choose shared accommodation. These are people who could be in either separate-bedroom accommodation or shared accommodation and choose the shared accommodation rate. Of the people who are not on HB, 40 per cent of 25 to 34 year-olds share. I am excluding students from this. This is not a form of housing that is unusual or imposed on people; it is an absolutely normal form of housing.
	I accept that there is real concern about the impact of the shared accommodation rate and particularly about the availability of accommodation. I said in Committee that the market will not remain static and that I believe it will respond in time to the increased demand for this type of accommodation. The feedback that I had from officials following their recent meeting with a Methodist housing association suggests that this is already happening. The association is already converting some of its property into shared accommodation. I am also reassured by meetings that I have had with stakeholders that a number of support organisations are helping to match tenants to shared accommodation.
	Following wider discussions with stakeholders and within the coalition, we agreed to introduce two further exemptions for the new age group. These exemptions will help those moving on from specialist homeless hostels to try to reduce the likelihood of them returning to a life of rough sleeping. We also want to ensure that these changes do not pose a risk to the public, which is why we provide an exemption for the small number of ex-offenders most likely to pose a risk.
	The most vulnerable, about whom several noble Lords have expressed concern, will be exempt because they are entitled to a severe disability premium. For others, however, it would be difficult to draw up exemptions and include all those we thought could not share without opening the exemption so widely as to be untargeted and costly. We estimate that 18 per cent of those affected have a disability premium, but a discretionary housing payment can be considered by the local authority if it considers that an individual's circumstances warrant assistance. We are looking at how this exemption will apply in universal credit and we will come back on that.
	The noble Baronesses, Lady Lister and Lady Hayter, raised the issue of the non-resident parent. Making double provision for two homes would be an unreasonable use of taxpayers' money. Around 10,000 such parents in shared accommodation have some contact with their children. That contact is not always overnight, so that figure would be smaller. It would be very difficult to police any kind of defined exemption here. The noble Baroness, Lady Hayter, lives in a different world from me if she thinks that she can get the children to do the washing up.
	The noble Baroness's amendment would provide protection to those who might arguably be in a better position to meet any shortfall, particularly if they had been in work. It would also seem unfair to those aged 25. The amendment would halve the savings we need to generate from this measure, which would then need to be found elsewhere. There really is only one option, which is to apply the shared accommodation rate within universal credit as intended. Given the short duration of most claims, I do not believe that the amendment is necessary.
	We are committed to looking at the impacts of these changes and have commissioned an independent review and monitoring of extending the shared accommodation rate. This extensive evaluation will allow us to assess the long-term impacts on the under-35s and the availability of shared accommodation. As with all new policies, we shall continue to listen to any feedback that we receive on how this is working. I will not take this away for further consideration in this formal context, but I will of course be happy to sit down with her and discuss how her figures work outside that formal context. I hope that, in view of what I have said, the noble Baroness will be able to withdraw her amendment.

Baroness Hollis of Heigham: I thank noble Lords for taking part. There are very real concerns, not just for women who are going into an HMO where there may be people who appear to them threatening, but also for those who appear to be the threatening ones, for whom it is also difficult. Both sides find this unacceptable. I am also grateful to my noble friends Lady Lister and Lady Hayter who helped to spell this out.
	To some extent, the Minister missed our point. None of us has any problem whatever with people who choose to share. It is fine when you choose to share with people you know or when you have gone through an ad in the local paper and gone in to see them. It is fine if it is a salubrious flat and together you can pool your resources. Some may be in work, some may not, but you can manage the rent. That is fine. That is not what we are arguing about. We are arguing about someone who has lost their job and is in a one-bedroom flat for which they are currently able to pay. After 13 weeks, their HB expires and they are only entitled to LHA at a shared room rent. They are forced, against their will, to move into accommodation with strangers at the very same time as we are expecting them and needing them-and they want-to prioritise their search for a job. It is simply silly to undermine their work ethic and their work efforts. Instead, we are diverting and deflecting them into the search for a home which is safe, salubrious and affordable. This is silly and stupid, which is not a charge I would normally address to the Minister, because he is neither of those things.
	On cost, I put it to the Minister that it would be reasonable to assume that a woman who had lost her job as, say, a secretary in a firm that had closed would get back to work within six months if her housing position was unaffected. If her housing situation was affected and she had to go in search of new accommodation, possibly ending up in another area, it might take her 12 months. That is not an unreasonable supposition; six months if we accept my amendment, 12 months in the existing situation. The cost of the extra three months of HB is £1,300, based on the assumption of an extra £100 a week. If, however, she did not spend a further six months on benefit, because she got back into work within six months as opposed to a year, she would save the DWP £3,900. Subtract those two, and the additional savings to the DWP, by supporting this amendment, for that one individual person, is £2,500, and that is before you get money from taxes and national insurance. Multiply that by, say, 15,000 people out of the group of 62,000 and the Government would save an additional £40 million. That is where the savings lie.
	You can challenge my behavioural assumptions-that you go back to work within six months if you do not have to find another home and that it takes you 12 months if you do-but, from what I know in my city about how long it takes people to find work as the situation worsens, I do not think they are unreasonable. If the assumption is right, and 15,000 of that client group come into that category, the Government will save an additional £40 million, not halve the savings as the Minister suggested. That is nonsense on any behavioural assumptions. He is assuming that what he is doing will make no difference to people's propensity or ability to come back into work. That is simply untrue, particularly as the economic situation gets worse, and he must know it. He can make savings from the amendment if he chooses to work it through further.
	My final point is about safety. A member of my family was in a room in such a situation. There was thumping at his door and he opened it. This person in my family-who is six feet tall and strong-faced, as he opened the door, somebody who was naked with a knife in his hand. Do not tell me it cannot happen, because I know it has and it does. I therefore suggest, on grounds of decency, safety and cost effectiveness, that the Minister consider this amendment further, even if he is not willing to do so today. I beg leave to withdraw the amendment.
	Amendment 19 withdrawn.
	Amendment 20
	 Moved by Baroness Hollis of Heigham
	20: Clause 11, page 5, line 29, at end insert-
	"(6) Within one year of these regulations coming into force, an independent research review of their impact shall be laid before Parliament, and such a review to include the effects of such measures on the reduced incomes of social housing tenants and their families, the security of the rent roll of their social landlords, the depletion of tenants' savings, levels of arrears, levels of eviction, any increased homelessness and use of temporary accommodation, the reduced prospects of pensioners for rehousing, and the likely availability of housing stock to meet the new underoccupancy standards, and related matters."

Baroness Hollis of Heigham: My Lords, I will be very brief. The amendment indicates our very real concerns about the effect of all these cuts to housing benefit. We fear that if there is any reverse in our decision today on underoccupancy, housing associations will face mounting arrears, spend more time and employ more staff chasing deficits in rent. As a result, there will be even less chance for those housing associations to build the new housing stock we badly need. I know the Minister thinks my fears are exaggerated. I hope he is right. The House has alleviated most of my concerns, but we cannot properly calculate the behavioural effect of all these changes on tenants. The Minister is evidence-based-something we all welcome and respect-and he wants UC to work, as we do. I therefore hope that by the time the Bill has gone through its full passage in both Houses he will, if it is appropriate, find the resources to ensure that we have the research to undertake an independent review of its effects on tenants in social housing. Frankly, if we do not have that protection, I fear the worst. I beg to move.

Lord Best: I support the amendment. We already have up and running, thanks to the good work of the Minister, a really first-class piece of research looking at the impact of the housing benefit changes on families, poverty and a whole range of issues. I strongly congratulate him on taking that suggestion seriously and bringing forward a significant piece of research. It engaged a consortium of the top people at Oxford University, Sheffield Hallam University, Ipsos MORI polling and the IFS. I wondered whether that team might have its work somewhat extended to embrace the research suggested by the noble Baroness. It would not involve quite as much work because it would examine the 150,000 or so households that will now be affected by the underoccupancy arrangements. There is much important research to take place.

Lord Freud: My Lords, I acknowledge and commend the contributions of the noble Baroness and the noble Lord to the debate on policy. Both of them, particularly the noble Lord, Lord Best, played an important role setting up the independent research that the department has already commissioned around the local housing allowance. More recently, as noble Lords are aware, we have announced research looking at direct payments in the social rented sector. However, I must complain bitterly at the improvement to the negotiating position of the consortium that the noble Lord mentioned. When we carry out research, we always have open competition and no one is favoured. We choose the best researchers.
	I place real value on independent research. We need robust evaluation on the impact of welfare reform on housing provision. I know that we are taking some steps in housing benefit reform where we need to monitor the risks. I know that there are risks, and we have all discussed them. That is why proper research, considered properly and taken very seriously, is right at the heart of the protections that we are looking at in this area.
	I fully support the intention behind this powerful amendment. I want to go on record as saying that. I can tell noble Lords that the department is currently in the process of planning its research programme for 2012-13 onwards, subject, I have to add, to available funding-and I hope that noble Lords do not take that away from me in other ways. I intend to cover the size criteria and underoccupancy in housing benefit. We are considering separately how to evaluate universal credit. Noble Lords will be aware of the constant-piloting clause that we approved in Committee, which provides for a radically new way of looking at this important benefits system.
	All research commissioned by the department is published. I am sure that noble Lords will accept that it is not necessary to provide for this research in the Bill. I know that this is a probing amendment and we will look to providing this research at the right time. With those reassurances, I hope that the amendment can be withdrawn.

Baroness Hollis of Heigham: I am grateful to the Minister and to our noble colleague-I was going to say our noble friend-the noble Lord, Lord Best. If I may say so, the Minister enhances an already high reputation by his openness to the information that will come from research. We should give him credit for that and I am very grateful. I beg leave to withdraw the amendment.
	Amendment 20 withdrawn.
	Amendment 21
	 Moved by Lord Best
	21: After Clause 11, insert the following new Clause-
	"Payment of housing costs
	(1) This section applies to payments of the housing cost element of the universal credit.
	(2) Payment of the housing costs element of the universal credit must be made to a person's landlord where that person has requested or consented to such payment in agreement with their landlord.
	(3) Regulations made by the Secretary of State may prescribe the circumstances in which subsection (2) does not apply.
	(4) Regulations made by the Secretary of State shall prescribe the person who is to be treated as the landlord for the purposes of this section and shall make provision as to the discharge of liability consequent upon the making of any payments to the landlord."

Lord Best: My Lords, the amendment relates to the payment of help with housing costs-at present in housing benefit and later as the housing cost element of universal credit. The Minister has announced that in future the payment for rent must go directly to the tenant, not, as is possible at present, to the landlord. The amendment preserves the current option for the tenant to choose that the rent should be paid straight to the landlord where the tenant thinks that that will help with their budgeting and housekeeping.
	When I introduced a similar amendment in Committee, I pointed out that private landlords were already often very reluctant to take on tenants in receipt of housing benefit or local housing allowance. However, where the benefit is paid straight to the landlord, thereby minimising the chances of arrears, the reluctance of landlords can be much reduced. There is backing for the amendment from the private sector-the Residential Landlords Association, the British Property Federation and others. There is also backing from social landlords. This morning at the LGA, I addressed a conference on housing finance and was surprised at how strongly local authorities expressed their view that the direct payment of rent to tenants would lead to arrears and difficulties for councils in handling housing accounts. The amendment is also strongly supported by those who represent tenants-residents in the rented sector. Associations of residents in social Housing-TARAs-Shelter, Crisis and others are right behind the amendment, not least because surveys have shown that a high proportion of tenants would wish for their rent money to go to the landlord.
	The Government have agreed that this choice will be available to those of pension age. This amendment would extend that possibility to make this kind of sensible choice available to all tenants. The housing associations organised a pilot of their own in which they experimented to see how things worked out when rent was paid directly to the tenant. They found that arrears increased from 3 per cent to 7 per cent. If that was applicable generally, the cost to the housing association sector would be some £320 million a year in additional arrears. Local authorities have a similar stock of social housing which would double the figure to some £640 million a year. Housing associations also discovered that their administrative costs were very much higher when the rent did not come straight to the landlord in the form of housing benefit or-in future-the housing element of universal credit. The extra costs on administration for that are estimated at £100 million.
	If housing associations face those kinds of costs, the hazard is that lenders will not be so keen to lend to them. The Council of Mortgage Lenders is in favour of the amendment, as are the individual lenders, because they worry that housing associations will get into difficulties if they do not get the rent that they need. The Minister has set up some important pilot schemes to test ways of assisting tenants to handle the money provided for rent, and new arrangements for low-cost banking may be developed in the months and years ahead. However, the Minister undertook to look further at the option of giving more vulnerable tenants the right to choose to have their rent paid to the landlord. I know that he has been considering how a fast-track arrangement might be implemented to switch the payment of rent from tenant to landlord when arrears are mounting.
	These changes would be useful but they do not address the fundamental problem. Surely the best approach is to continue to give tenants the right to choose to have their help with housing costs paid directly to their landlord, and not to give them the temptations which are bound to be placed in their path if sums, perhaps in the region of £500 or £700 a month, were paid to them, and possibly used to satisfy the requirements of loan sharks and less salubrious lenders and creditors, rather than paid to their landlord. Can we not preserve the existing right of tenants to choose to be assisted in their budgeting? I beg to move.

Baroness Howe of Idlicote: My Lords, having listened to that explanation from my noble friend Lord Best, I have been completely converted to this approach. I certainly appreciate that the Minister is trying to educate people better to take care of their own finances, but the choice already exists for the individual tenant to decide whether to pay for themselves or to opt in to a system which is, from what we have heard, more satisfactory and reassuring to the landlord-whether a local authority or whoever. As all of us in this House are beginning to get a little older and, sometimes, a little forgetful, perhaps that is a helpful thought for later, when we get even more forgetful about things such as paying our rent.
	All I am saying is that this sounds the better way to do things. I am all for running courses to help people to cope better with their finances, but from the point of view of not wasting money, this is clearly a way forward.

Baroness Hollis of Heigham: My Lords, I would prefer housing benefit to be part of UC and to be paid to the tenant, because I think that that strengthens UC and makes it easier for one simple calculation to be made for the family. However, I support the amendment because, until the Government have rock-solid arrangements in place to ensure that the rent element in UC is immediately paid to the landlord, both tenant and landlord will, as the noble Lord, Lord Best, said, suffer.
	Why would the tenant suffer? He may have to pay transaction costs. If it is looped through his bank account and there are any outstanding overdrafts, debts, or whatever, his UC, including the housing element, will be top-sliced. That is when there is no temptation to spend it on other things. I checked with my housing association. Even with direct debits from tenants in work, those direct debits go astray-deliberately or otherwise-and intensive work has to be done in housing management to reconstruct them again. Tenants can risk losing their home if rent payments are not made automatically to their landlord. For some tenants, that will be a real struggle. If tenants wish to have their rent paid directly to their landlord, but that choice is being denied them, they will suffer.
	Why will the landlord suffer? Arrears will undoubtedly arise. I have doubled the amount in my housing association accounts because of potential arrears that I suspect will follow from this change, as have other housing associations. We will then also have to increase staff resources to try to collect those arrears. Private landlords, already reluctant to take DWP tenants, will certainly refuse. One reason for extending direct payments in the first place was to make it a more attractive option for landlords in the private sector, who have been notoriously reluctant since the 1950s to make accommodation available. They used to say, "No Irish, no blacks, no DSS, no dogs". Versions of that scrutiny, that winnowing out, I fear regrettably still apply.
	Ultimately, landlords may need to face evicting tenants. As many of those who cannot manage their money will be vulnerable, they may or may not be regarded as intentionally homeless. If they have children, they are a real problem for all parties, including social services.
	Furthermore, housing associations, including mine, are seeking to raise money from private sources, from banks-even, we hope, from pension funds, which is under negotiation at the moment-for building programmes. Our asset is the security of our rent roll. If tenants instead have money paid to them which is not rock-solidly paid immediately to the housing association or the local authority, that rock-solid asset base will no longer be as valued. We estimate that the proposal will cost us something like 50 base points extra on all the loans we raise. We become a worse risk and, as a result, fewer homes will be built. An amendment putting the decision in the hands of not the DWP or landlords but in the hands of tenants is surely the right way forward.

Baroness Lister of Burtersett: My Lords, I shall speak briefly in support of the amendment moved by the noble Lord, Lord Best, from a slightly different perspective, and repeat what I said in Grand Committee. In Grand Committee, I congratulated the Government on their research, Perceptions on Welfare Reform and Universal Credit, which sounded out various stakeholders about what they thought about some of the reforms. One thing that came from that from people who will be affected was that although they welcomed the one-stop shop approach of universal credit-to the extent that it is a one-stop shop-there were real fears about putting all the eggs in one basket. If all the money goes together in one lump sum, if anything goes wrong, people are left insecure-high and dry. If some of the rent payment is going to the landlord, where the tenant wishes it, that is mitigated. That is why that choice should remain
	Not expressed in this research but by a number of outside organisations is the worry about what happens to the money in the family. I know that the Minister argues that budgeting accounts will sort this out. I hope that they will, but I think that he knows that I am still slightly sceptical about the magical powers of the budgetary accounts. There are fears that the money may not be paid into the account of the person responsible for paying the rent and that they may not then have control over how the money is spent by their partner. That is a slightly different perspective from that of the noble Lord, Lord Best, who understandably and powerfully is relaying some of the concerns about housing providers, but we have to think about the extra burden that this might be placing on some families.

Lord Cormack: My Lords, the noble Lord, Lord Best, has made a powerful case. He made it very gently but forcefully. I was also struck by what the noble Baroness, Lady Howe of Idlicote, said. As one who held MPs' surgeries for about 40 years and saw people come in who were often in considerable distress, I know that it is not just the feckless who get into financial trouble. Many decent people get into financial trouble. The ability to say that this money should go direct to the landlord could be of enormous help to someone who suddenly has a sick child and feels that they must spend the money on that child. If the money has gone to the landlord, the landlord is secure and the tenant is secure. That must surely be wholly desirable.
	Those of us who have been constituency Members of Parliament know how difficult it is to persuade private landlords to consider tenants in this general category. We need an abundant supply of privately rented accommodation. Anything that may detract from that is to be regretted.
	I admire my noble friend, because he is thoroughly the master of his brief and because his underlying aim, which is to create a more responsible society, is one to which we can, surely, all subscribe, but there are exceptions and times when it is right to give a choice.
	Another point, which the noble Baroness, Lady Howe of Idlicote, made, struck a chord with me. There are many elderly people in receipt of benefit who get confused. I am not talking about people who suffer from dementia, but we all know-the noble Lord, Lord McAvoy, knows from his constituency experience-that elderly people do sometimes get confused. They think, very genuinely, that they have paid something when they have not. It would be a great blessing to give those people that choice.
	I would urge my noble friend the Minister to give very careful thought to this. I hope that the House will not divide on it tonight, but I hope that he will be able to give some thought perhaps even to putting down an appropriate amendment at Third Reading.

Baroness Hayter of Kentish Town: My Lords, dinner beckons. Nevertheless, there are seven good reasons for accepting this amendment.
	First, it is cost free. The facility to pay rent directly to landlords is there for certain beneficiaries, so it would simply be a case of using this for others.
	Secondly, it helps to give financial responsibility and decision-making to claimants, as it would allow them to choose to have the rent paid in this way.
	Thirdly, it is what the rest of us do with our mortgages or rent: it goes straight out of our bank accounts, normally the day after payday-in my case, usually the same day-so that we cannot get our hands on it in the mean time. The difference is, of course, that many of these claimants do not have bank accounts, or a joint bank account if they are a couple, and therefore do not have the ability to make such arrangements for direct payments. Furthermore, if they have a basic bank account, such accounts cannot go into the red, and so if there is not money to pay the rent, it simply will not be paid, even with a direct debit mandate, leading to the build-up of arrears.
	Fourthly, this amendment is strongly supported, as has been said, by housing associations and by local authorities. Both know that arrears will build up more quickly without this amendment. For housing associations, the interest on borrowing will increase as their assured-rent income will decrease. To give the example of one housing association, 85 per cent of Riverside tenants choose to have their rent paid directly, as many of its tenants do not have bank accounts, and many more fear the bank charges if they go overdrawn. This is an important way for low-income households to manage their finances. If this existing facility is withdrawn, pilot studies show that, as has already been mentioned, rent arrears are likely to rise sharply, putting tenancies at risk. In addition, funders have indicated that they are likely to regard lending to housing associations as higher risk and thus to increase the cost of funding. In the long term, it will mean that social housing providers will simply be able to do less. Income streams to local authorities will similarly be threatened if direct payments, which exist now without any problems, are ended. CoSLA, the association for local authorities in Scotland, estimates that this will cost about £50 million a year in Scotland alone.
	Fifthly, many vulnerable families will be at risk. To quote again from CoSLA:
	"COSLA is deeply concerned that Housing Benefit paid direct to claimants without sufficient safeguards will result in an increase of rent arrears and evictions, sending households spiralling into debt and facing homelessness".
	We know the families for which the risk of not paying the rent directly will be the greatest: those with debts, where the pressure to pay these off-whether to the gasman or to the loan shark-will be pressing; those with a family member with a drink, drug or gambling habit, where temptation to use the rent money will be high; and those with immediate demands, as the noble Lord, Lord Cormack, has said, for money to feed their children and yet who want to ensure that the roof over those children's heads, albeit not today's problem, is equally vital, so want to have that rent assured. While we know some vulnerable groups will have their rent paid directly, we can see no reason to wait until borderline cases get into problems, struggle and get into rent arrears, before we allow them to have the rent paid directly. Why risk that for no good reason?
	Sixthly, it will make sure that we do not dissuade private landlords from coming into this sector.
	Seventhly, the strongest argument: the noble Lord, Lord Best, who chairs the Local Government Association and has forgotten more about housing associations than most of us will ever learn, tells us it is the right thing to do. We concur.

Lord Freud: My Lords, my intention is to reassure the noble Lord, Lord Best, so that he withdraws his amendment. I start by trying to convince the noble Baroness, Lady Howe, and my noble friend Lord Cormack of the reason why we are doing this. It is not an arbitrary thing. We are not doing it because we want to annoy housing associations or local authorities. We are doing it for a very simple reason. If you are a tenant in social housing whose housing benefit goes straight through to the landlord and you take a job, all your arrangements for paying for your housing have to change. It is a major change in your arrangements and a real block on you taking the job. It is a major thing for you to organise, and you have to learn, when you take that first job and your housing benefit goes down within universal credit-because that is the change-that the money no longer goes through automatically to the landlord.
	We have to break that link. It has to be the same arrangement whether you are working or not working. We deliberately excluded pension-age people from this because we are not expecting them to work. We do not need to worry about the people who find it difficult to work. It is working-age people who we want to go into work.

Baroness Meacher: I listen to the Minister's passion-"We have to do this, we have to do this"-and I find myself thinking that that would be fine if we were in normal circumstances and the benefits were not changing but were pretty much going on as they always have, and people were not going to be facing major drops in their benefit levels or having to adjust to having to move because of all sorts of rules about underoccupancy or because of the tying of benefits to the consumer prices index and so on. There are so many ways in which people on benefits are going to be losing-that is the context-and this is not the time to be determined to bring all these people into line with people in work. Can we not wait until things are stable and then maybe introduce the rather nice idea of bringing these two groups together?

Lord Freud: The answer to that is very simple: the universal credit will, each year, inject an extra £4 billion into the pockets of the poorest people. That is what the universal credit does. It will start coming in in 2013-17, when hopefully the laws of the business cycle will still be working and we can expect an upturn at some stage. As we move into that situation, the concern will be what happens to the universal credit. This measure is for universal credit. It does not stand outside it.

Baroness Meacher: I apologise for interrupting again, but £4 billion is surely a tiny amount relative to the losses in projected benefits. This huge budget would normally go up very extensively each year, would it not? I do not have all the numbers in my head, but £4 billion in a tiny fraction of the actual real losses in benefit that people are going to face.

Lord Freud: Absolutely not; £4 billion is a very substantial figure. Over the course of this SR, we are looking at a loss of £18 billion spread over the four-year period. The noble Baroness can do the sums. The most important thing about universal credit is that the money goes into the pockets of the lowest two quintiles very efficiently. I contend that the noble Baroness's argument is not a real argument.

Baroness Hayter of Kentish Town: My Lords, if I understand the Minister correctly, he is saying that this is all part of getting people off benefits and into work, which we absolutely support. However, this will also cover those people who are never going to work-those in the support group-as well as people with young children who are not in work for some time. Therefore, we are not talking only about people who are on the cusp; even those people will lose the right to have their rent paid directly.

Lord Freud: No, my Lords. We have made it absolutely clear that we expect those who are vulnerable to continue to have payments made directly to the landlord. Indeed, in the private rented sector, where this process has already been in place and has worked rather well, 80 per cent of people pay their landlord directly, and 20 per cent are regarded as vulnerable and have a payment made directly to the landlord. That is how it works there. At the moment in the social rented sector, 95 per cent have direct payments and 5 per cent pay the landlord themselves. Therefore, there is a real disparity there.
	I want to provide some reassurance for noble Lords who think that this is a draconian measure. I need to explain to the noble Baroness, Lady Howe, and the noble Lord, Lord Cormack, that we are doing this for a real reason. It is not arbitrary; it is intended to make sure that there are no artificial barriers for people who would stay in the comfort zone of not working. We need to make it easier for them to make that transition, and that is one thing that we are doing. This will empower people and allow them to manage their finances.
	I shall now come to the reassurance factors, which I hope will have noble Lords nodding happily on the Benches. I am determined that, while we introduce this system, the housing sector will remain financially stable. I talk regularly to banks and to rating agencies in particular about what we need to do to make that happen. I am absolutely convinced that we can have our welfare cake-the transformative cake-and financial stability for the housing sector. I shall do nothing that undermines the security of the housing sector in this area. I absolutely understand that this country needs more housing, and it would be madness for us to undermine that ambition.
	I completely understand the two imperatives here. We are working closely with local authorities and housing associations in running half a dozen demonstration projects, which are designed to find out exactly how to make direct support payments for housing costs so that they work with universal credit. I have been incredibly pleased that the industry has shown real enthusiasm for taking part in these demonstration projects, with no fewer than 70 different groups looking to join in. During the selection process, we have been delighted at how much choice we have had, and we are finding out what is going to work to get the two things that we need. These demonstration projects will allow us to identify those who are likely to struggle financially. The projects are testing not whether we should introduce direct payments but how to support landlords and tenants ahead of the scheme being introduced. The important part is to get the safeguards operating properly. We need to see when people are not able to handle the system and switch payments to the landlords, and then find out how to recoup the money over the period when landlords do not have it so that their security of income is locked into the system. That is what we are trying to find out here.
	The noble Lord, Lord Best, mentioned the London & Quadrant research, and we are aiming to apply that to the demonstration projects. It shows the importance of communications. Clearly, we want to improve the outcome and throw out the doubling of arrears.
	I have talked before about how to support people-a matter raised by the noble Baronesses, Lady Lister and Lady Hollis. We need to get proper banking products into the system. At least one thing that we need is a simple direct debit system. The money should flow in and out on the same day so that the example given by the noble Baroness, Lady Hayter, works. We do not want a gap there, and we must be able to manage that. The point is that if we can manage it with a banking product, as the noble Baroness, Lady Hayter, suggested, then people can float off from benefit dependency into the world of work without-

Baroness Drake: I speak as someone who is rather preoccupied with financial inclusion. The Minister is describing a process, but if there is a product-a bank account-that works for low-income or unemployed people and the account is in debt, how does one know that the bank will pay the direct debit? Can he be confident that it will pay if there is a deficit in that account?

Lord Freud: That is exactly what we need to ensure and that is exactly what we are discussing with the banking groups. Specific banking support is exactly the issue that we need to get right.

Lord Cormack: My noble friend is trying to be helpful and I appreciate that very much. Is he saying that this amount of money that is earmarked for paying the rent will be used for paying the rent and for nothing else, and that, unless he is assured that he has the product that will deliver that, he will not move in this direction?

Lord Freud: I am saying that we are working really hard with the banks and the banking community to make sure that we have an escrow arrangement of that nature, and we are doing this at several levels. We can have a general agreement, which I shall discuss with the banks as a whole, to provide a generalised protection. However, I am quite interested in getting particular banking products that will provide a simple bank account and elaborating on what could be a new level of support for some of the poorest people in our community. We have a one-off chance with universal credit to ramp up support for the poorer people in our community, and we are putting a lot of energy into achieving that. I have talked about this before. It is one of the hidden gains that we can get out of the introduction of this new system. Rather than people living on drips of money from here and there, we can really start to help them, supporting them in managing their finances and getting true independence. This is a core part of what we are going to be doing with universal credit, and part of that relates to housing. Housing will be a major part of people's total income stream. We are not doing this for fun or to annoy anyone; this is absolutely part of what we are trying to do with universal credit.
	I need to deal with one other point-the issue of safeguards raised by the noble Baroness, Lady Lister. We are concerned about the safety and welfare of claimants and, where we have a concern, we need to put direct payments in place. There are vulnerable groups who are not able to manage the potential freedoms, and for them we will make sure that we go on with existing arrangements for direct payments.
	We have commissioned a consortium led by Professor Paul Hickman-I am sorry, but this is a bit of an announcement late at night-from the Centre for Regional Economic and Social Research at Sheffield Hallam University to evaluate the effects of direct payments to claimants in the six demonstration project areas, which I shall announce soon. The other key team members are Dr Kesia Reeve, Peter Kemp of the Oxford Institute of Social Policy, and Stephen Finlay from Ipsos MORI, names that I know that the noble Lord, Lord Best, approves of. That will give us a cumulative understanding of the impacts of direct payments and inform the detail of delivery under universal credit.
	Research published by the Joseph Rowntree Foundation in 2007, Paying Housing Benefit to Claimants, on both private and social tenants' experiences of and their hypothetical attitude toward the management of their own housing benefit confirms that a significant proportion of social tenants have the potential to manage their own housing benefit payments. We will also have an advisory group for the demonstration projects and a wide range of local government, money advice, voluntary sector and other external stakeholders who will be invited to join that group.
	We had a slight exchange about what "choice" means and we have been teasing each other about the imbalance of power when you have choice. It concerns us that while there is theoretical choice today, only 5 per cent of people take it. As it stands, tenant choice does not go far enough, which is why I am concerned about it. I hope that the noble Lord, Lord Best, will accept that we are making incredible efforts here to be transformative and not to undermine the housing sector, and on that basis will feel that there is enough going on for him to withdraw this amendment.

Lord Best: My Lords, I am very grateful to all of those who have joined this debate. I am sure that we all feel much reassured by the passion that the Minister brings to this subject and by the genuine efforts that he is making to see that the behavioural change that he wants is triggered and that the disadvantages of going down this route are mitigated. The excellent research that he is announcing tonight-and I thank him very much for it-might show that it is not possible for only 20 per cent of the tenants within the social sector to be regarded as vulnerable and to have their rent paid directly and that there is a rather larger number.
	However, I think the Minister is keeping an open mind as to what proportion of the sector will get their rent paid directly, and I greatly welcome him saying how much he is concerned not to undermine the social housing sector, the production of new homes, the sector's lending and the security of income within that sector. If those discussions with bankers fail and the products do not materialise, we must place our faith in the Minister and hope that he will recognise that the difficulties still exist and that rent direct to the landlord is going to be necessary for a larger proportion of people. On that basis, I am happy to withdraw my amendment.
	Amendment 21 withdrawn.
	Consideration on Report adjourned until not before 8.54 pm.

National Well-being
	 — 
	Question for Short Debate

Baroness Tyler of Enfield: To ask Her Majesty's Government what steps they are taking to promote and measure well-being and what role public policy should play in shaping national well-being.

Baroness Tyler of Enfield: My Lords, I would like to thank noble Lords who have found time in this very busy period to speak in this debate and I hope that it has not been too much to the detriment of their own well-being.
	Why would I want to talk about well-being today and why do I think that it is important? We all know intuitively what well-being is but there is as yet no standard definition. There is general agreement from the growing body of social science research that a combination of physical, social, environmental and psychological factors influence well-being. Good mental and emotional health is a crucial element of well-being, but by no means the whole story. A good deal of work has already been undertaken to measure well-being and happiness at community and individual levels. This has demonstrated positive factors, such as good relationships, being employed and being financially secure, along with negative factors such as poor relationships, family bereavement, poor health and unemployment.
	Back in 2008 the Government Office for Science's Foresight report on mental capital and well-being referred to mental well-being as,
	"a dynamic state, in which the individual is able to develop their potential, work productively and creatively, build strong and positive relationships with others, and contribute to their community. It is enhanced when an individual is able to fulfil their personal and social goals and achieve a sense of purpose in society".
	I think that sums it up very nicely.
	Many thinkers, commentators and social scientists are giving the issue of well-being an increasing amount of attention and the idea has started to creep into the mainstream of public policy and political thinking. All three parties are starting to talk about well-being and quality of life, albeit in their own ways and using their own language. I would go so far as to say that it has prompted quite a deep philosophical debate about the central purpose of public policy and indeed government itself. I sense a greater recognition that economic growth is a means to an end rather than an end in itself and that good government is ultimately about improving the lives and well-being of our fellow citizens. But it is undoubtedly a very tough time to be having these sorts of ideas and of course sceptics are bound to view it as a distraction from our very pressing economic concerns.
	In November 2010 the Prime Minister announced:
	"From April next year we will start measuring our progress as a country not just by how our economy is growing, but by how our lives are improving, not just by our standard of living, but by our quality of life. We'll continue to measure GDP as we've always done, but it is high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country's progress".
	He added-and I give him all due credit for doing this:
	"To those who say that all this sounds like a distraction from the serious business of government, I would say that finding out what will really improve lives end acting on it is actually the serious business of government".
	The practical outcome is that the Office for National Statistics has been tasked with consulting on the development of new well-being measures that cover the quality of life of people in the UK, environmental and sustainability issues, as well the economic performance of the country.
	Well-being clearly depends not just on the circumstances of people's lives but on how they interpret and respond to those circumstances. Recent welcome policy initiatives, such as the promotion of emotional resilience among children in schools and the expansion of psychological therapies focus, on which I am sure we will hear more from the noble Lord, Lord Layard, all rightly recognise this. On the bright side, the very recent ONS statistics, which came out in December, found that around three-quarters of adults in the UK rated their own life satisfaction as seven or more out of 10. These findings also found that having a partner and being in good health were positively associated with life satisfaction. Some people considered these results surprisingly positive, given all the doom and gloom around, and it sparked the inevitable quips about the usefulness of what has been dubbed the "happiness index" from various quarters. Next year we will have much richer data when the ONS has the results from the full 200,000 households that are currently being surveyed.
	I believe that a single national measure of well-being should help generate a national debate about what really matters to people. "If you treasure it, measure it" is a good adage. It will be relevant to government, of course, but also to employers, the media, the producers of consumer goods and many others involved in our national life. Others are calling for a wider set of indicators that local communities can use to measure their population's well-being against other communities. Given the general thrust towards localism, this has much to commend it, and I would be very interested to hear from the Minister what he thinks on this.
	There is much evidence, to which I have alluded, about what is important to well-being. It includes income, loss of income, unemployment, being able to do interesting and stretching work, the number of hours worked, commuting, consumption decisions, debt, being able to walk around the local neighbourhood, being able to participate in community activities, volunteering and trust in local institutions. It is a very long list. I do not have time to go through it in any detail here. Evidence shows a clear relationship between levels of well-being and inequality when different countries are compared. Well-being tends to be lower in countries with higher inequality of income and wealth. It is important to understand that. Equally, in terms of what drives well-being, evidence from surveys and research is quite consistent about what matters most in people's lives. Individuals across nations and social classes put more value on non-monetary assets than on their financial situation. Indeed, quite often in surveys the biggest factors by far that influence people's happiness are their family relationships and their relationship with their partner.
	Turning to the workplace, Dame Carol Black's review of the health of the working-age population in 2008 identified business as a key partner in promoting or otherwise adult health and well-being across Britain. According to that review, the annual economic costs of sickness absence and worklessness associated with ill health and well-being were over a staggering £100 billion, which is greater than the annual budget of the NHS.
	Where does all this lead me? I would like to draw three conclusions. First, well-being should be a key political priority, as it encompasses the things that are most important for our society as a whole and to us as individuals. While prioritising well-being includes ensuring that we have a stable and thriving economy, it crucially also takes a much broader view of success than can be measured in just economic terms.
	Secondly, we should warmly welcome the fact that the UK Government are now measuring people's subjective well-being in a substantial and meaningful way. I think it is important that we keep a cross-party consensus going on the importance of this. Thirdly, we need to move rapidly from measurement to action. Measurement on its own achieves very little, so it is essential that we reshape the processes of policy development, implementation and evaluation to take well-being into account as soon as we can. There are some encouraging signs here, with the Cabinet Secretary, Sir Gus O'Donnell, already ensuring that guidance for policy-makers is being updated so that well-being is taken into account. That includes the Treasury Green Book, which will be well known to some, and the setting up of the Social Impacts Task Force within government. Taken together, I very much hope that these measures will finally lead to that holy grail of truly joined-up policy-making in Whitehall. I know from many years' experience in Whitehall how very difficult that is.
	I welcome this focus on practical action. Nowhere is this more important than in family policy and the services available to support families and children, including help with parenting. We heard recently from the 2011 UNICEF child well-being report that British parents often feel stressed and lack the time or, indeed, the confidence to build a strong nurturing relationship with their children and family. Sometimes that gap is filled by a focus on material things and consumer goods. The message from children themselves was clear. Their well-being centred firmly on being able to spend time with a happy family whose interactions with them were consistent and secure, having good friends and having plenty of things to do outside the home.
	That is why I think that personal, social and health education, focusing on the importance of relationships, is so critical and should form part of the core national curriculum and include a strong focus on emotional well-being. It is no co-incidence that schools that have pioneered this sort of approach, where well-being and building positive relationships run through the whole school ethos and curriculum and where counselling is available for those who need it, say that there is a clear link to improved academic performance. It is also why I would like to see counselling and other types of emotional support available in all schools in England, as it is currently in Wales and Northern Ireland.
	I can think of no better way of concluding my opening remarks than to quote the oft-quoted words of Bobby Kennedy in a speech more than 40 years ago. I know noble Lords will have heard them before, but I will say them again. He said that GDP,
	"does not allow for the health of our children, the quality of their education or the joy of their play ... It measures ... neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile".

Baroness Sharp of Guildford: My Lords, I thank my noble friend Lady Tyler for raising a very interesting and important question. I attended the seminar held about six weeks ago in Portcullis House at which Sir Gus O'Donnell spoke about the work that the Office for National Statistics is doing on measuring well-being. I am interested in this topic because, as an economist, I have always been aware of the shortcomings of GDP measurement and of how much more there is to life than just the goods and services on which monetary value can be placed. Yet there is the difficulty of developing any proxy that tries to measure these other things in life. I remember the early days of cost-benefit analysis, when we had the Roskill report on the third London airport and the lengthy deliberation over what value one would place on a Norman church. The value that was put on it in the study was the value that the parochial church council had placed on it for insurance value, but the council admitted that that was the value that it felt it could afford to put on the church rather than any real valuation.
	There are very real difficulties here, and there is the conundrum that many of us have pondered over for a very long time. I was an assistant lecturer at the LSE with the noble Lord, Lord Layard, in the 1960s when the Roskill report was being deliberated over. I remember even then, at the time when GDP was going forward on a fairly regular basis, there was the conundrum of why it was that if we were all getting so much richer, we were not feeling happier. This is a fundamental question that the noble Lord, Lord Layard, has been asking for some time.
	I wanted to speak in this debate because I want to share with the House my experiences over the past six months when I have been leading an inquiry looking at the role of further education colleges within their communities. It fits into the scenario of the Government giving further education colleges greater flexibility over decisions about how they should spend their budgets. I was sponsored in this inquiry by the National Institute for Adult and Community Education, the AoC and the 157 Group of colleges. My remit was to look at the role that further education colleges do and can play within their communities and the added public value that their leadership can bring to those communities. It led me to do a lot of reading, a lot of visiting, a lot of talking and a lot of thinking about this subject.
	My visits were perhaps disproportionately to very good colleges classed as outstanding by Ofsted. What hit me more than anything else was how brilliantly some of our colleges are reaching out to their communities and working with them in all kinds of different ways, not only in spreading the message of learning and skills but giving to those communities the self-confidence and the self-esteem that give them a much greater sense of community and, from that sense of community, a greater sense of well-being.
	I would like to give three illustrations of the sorts of activities that I experienced. I visited a community hub in Bolton where the college worked alongside the local authority, using an old primary school in an area that was acknowledged to be disadvantaged. It had been going for some 20 years, and it provided the community with anything and everything from cookery classes and knitting groups through to adult literacy and numeracy. It also ran a youth group that had attached to it a boxing club and a cycle club. It served old and young alike. Graduates from the community hub had gone on to other college courses-access courses, A-levels and degrees in social work-and a lot of them had come back, stayed within the community and worked as community leaders and at the hub itself helping to bring others in. They were the activists and community leaders there; they instilled a sense of community and pride within the neighbourhood. It was this hub that organised street parties for the royal wedding. The cycle club had a sponsored ride from Land's End to John O'Groats, raising money for a local charity. The boxing club was winning trophies all across the north-west, and they were extremely proud of it. The hub was very much the centre of the community, organising it and giving it a considerable sense of pride.
	Another college that I visited did a great deal of youth work. It linked up with local youth clubs, the local police and youth offending teams. It provided for those young people facilities where they could meet, sports activities such as football and basketball, in addition to things like motorcycle maintenance classes. It brought in young people to use the college facilities so that they might get used to the idea of coming into college. Having seen the facilities and the classes that were being run, they might be induced to sign up for some of them. They turned from being NEETs-those not in employment, education or training-into being in training and very often going on to further qualifications. Again, it was an obvious linking up.
	At another college, the principal discovered that the local PCT was having great difficulty in meeting its young people's well-being and health targets. He said, "Well, why don't you come and work from within the college?" This was set up and the PCT within two weeks had hit the yearly targets which it had failed to meet for the previous two or three years. It now provides within the college a well-being centre for young people. It is a win-win situation, because the PCT has hit its targets; teenage pregnancies are noticeably down within the community; and college attendance rates are noticeably up. In addition to that, the nurse function within the college is now paid for by the PCT, which provides the staff for the well-being centre.
	I found all this extremely encouraging. It seemed to me that there were three elements in this success. One was leadership, another was partnership, and the third was vision. The college leadership provided the catalyst for those partnerships to be formed, and the partnerships led to greater involvement in the community. Social energy is unleashed. As a result of this activity, I found myself reading over the summer the work of the Royal College of Arts on social productivity. It seemed to me that this activity displayed precisely what the college was describing. By involving people in these activities, you could unleash social activity which gave people the confidence and self-esteem which led to well-being. I coined the term-and this is the title that I gave to my report-"dynamic nucleus": colleges could be like the centre of a Catherine wheel, as a catalyst, sparking off through partnership all kinds of other activities. These activities can add considerably to social well-being.

The Lord Bishop of Chester: My Lords, I think that the time permits me to speak briefly in the gap. I was not sure that I could be here in time for the debate, so I did not put my name down.
	Well-being is a very fluid and flexible word, as we have heard. It is quite closely correlated with happiness. Surveys of people in employment in different professions show the clergy as among the happiest groups of workers in our country, which I do not believe has any correlation with GDP.
	Certain things such as well-being or happiness arise best if you do not try to achieve them directly. Some things in life are a bit like the soap in the bath: if you try to grab hold of them, they slip out of the hand. It is a little like the character of love: you cannot force someone to love you, whoever they are. I cannot get one of my clergy by the scruff of the neck and say, "You will love me, won't you?" They may well squeak back, "Yes, Bishop", but I know that they will not really mean it. Love has to arise out of the truth, the reality and the richness of a relationship, but you cannot force it. Often in the long dynamics of a happy marriage, it is as the partners in a couple realise that they have to let the other person be who they are and not try to change them into what they would like them to be that the happiness in a marriage often develops better. In the average marriage, each partner tries to change the other one into what they would like them to be. This causes trouble for about 20 years; then they give up and are happy.
	While the Government of course have a place and a role to play, part of the wisdom of government is to realise the limited place that it has. If I were to look to the future and to well-being, it would be to allow our children to be children. The surveys of the well-being and happiness of children in our society are a major worry. I correlate that partly with the fact that we start children at school so young compared with many other countries. We almost try to force children on life's journey too soon. The same is true generally of the place for what I call the intermediate institutions between government and the individual. We tend to see an oscillation in our society between the power and reach of government and perfectly proper emphasis on the freedom and rights of the individual. Both are key aspects of the dynamics of society, but they very easily squeeze the intermediate social or human institutions, which are largely those which promote well-being and happiness. We have gone through a period of almost trying to grasp after well-being too much.
	In our increasingly diverse society, key to promoting well-being is to recognise that diversity, to allow a genuine tolerance, even of things that we do not particularly like ourselves, and almost to get into the way of thinking, "That is the way in which a mature, diverse, pluriform democracy will have to work". To some extent, that means the Government employing a self-denying ordinance.
	Perhaps I may end by quoting a verse from the Bible-many on these Benches are very loath to do so in your Lordships' House. One of my favourite verses is simply:
	"But seek ye first the kingdom of God ... and all these things shall be added unto you".
	Happiness and well-being are in a sense the other things that are added unto us, but it is only if we divert our attention to truth, beauty and justice and all those other values that real well-being and happiness will emerge, as a by-product in one sense but as a real fruit of that perspective.

Lord Layard: My Lords, I congratulate the noble Baroness, Lady Tyler, on proposing and securing this debate. I strongly agreed with everything that she said.
	I do not think that there is any issue more topical or more urgent than this. Even before the economic crisis began, people world wide were beginning to question whether economic growth really should be the key touchstone of the policies of their Governments. "Surely", people were saying, "human well-being must be the ultimate goal".
	Among governmental organisations, the greatest credit goes to the OECD for being daring enough to highlight this issue in 2004 when it began the first of its great conferences on defining progress. When it comes to individual countries, Britain is seen world wide as being the country, other than Bhutan, which has done more to promote well-being as a government objective, to think about it and to move towards measuring it. It is fair to say that many people around the world are looking at Britain to see what lessons can be learnt from how we are handling these issues here.
	Of course, this started under the previous Government. We had well-being divisions set up in many departments, including health, employment, education and environment, and in 2009 the Office for National Statistics began its work on how to measure our national well-being. That said, of all the political leaders in the advanced world, our present Prime Minister has been outstanding in championing the idea that well-being should be a central, if not the central, objective of government. He said it in 2006, when he first became leader of the Conservative Party and talked about general and national well-being, and he said it even more emphatically when the measurement exercise was launched last November. He was absolutely right-I am not sure whether the right reverend Prelate would agree-that if you ask what is the purpose of government, it is difficult to see any other purpose for government than to create the conditions in which people can lead happy lives. How they find happiness is a subtle matter, but the Government create many of the conditions in which people lead their lives and surely that should be the basic guiding principle. I agree with Thomas Jefferson, who said that the care of human life and happiness is the first legitimate objective of government. I challenge anyone to come up with any other legitimate objective of government.
	Perhaps I may comment first on the issue of measurement and then on the policy implications of the well-being objective and the Government's performance in that respect. As the noble Baroness said, if you do the wrong thing, you search for your keys where the light is rather than where they really are. You only do the right thing if you measure the right thing.
	It used to be supposed that it was impossible to measure the quality of life as people experience it in themselves, but in the past 30 years there has been an explosion of research on happiness which has shown that it is as measurable as any other internal state. We measure people's political attitudes and do not think that is highly controversial; we measure whether they are unemployed, which depends on their state of mind in the way that it is measured in our official statistics; and how to measure depression used to be a subject of controversy but it no longer is. I am quite sure that in due course we will have a settled way of measuring well-being.
	We currently have a number of ways and it is absolutely clear that although none of them is perfect-no measurement of anything is perfect-the measurements we already have provide valuable and meaningful information. For example, how people reply to questions about their happiness is closely related to the objective measurements you can make of electrical activity in the relevant parts of the brain, as well as being well related to the observations made by relatives, friends and observers; and the answers that people give to these questions are explicable in terms of many of the factors such as those mentioned by the noble Baroness.
	This is not the place to discuss the exact questions the ONS is trialling-I declare an interest in that I have been involved in advising it about what questions to ask-but the Office for National Statistics, under its able chief statistician, has approached this issue in a most professional way. It has been testing many alternative approaches suggested by different people in addition to the four main questions it is already asking on a routine basis. By next summer they will have been answered, over a 12-month period, by 200,000 people
	It will be an important moment when those results are published because it will give us, for the first time, an account of the state of the nation in terms of what I maintain matters most-how people actually experience and evaluate their lives. I am not sure whether it would be too grand to say that this will be a moment of comparable importance to the Domesday Book, or the first census, or certainly the great Rowntree surveys of wealth and poverty. It will show us, for the first time, who in our population is in misery and who is not. Many of the results will open our eyes, as did the Domesday Book, the census and the Rowntree surveys. It will be a very important moment in how we view our country.
	It is also very important that the Government have insisted that the sample is big enough to provide valid and reliable results for each local authority area. One can imagine the debates in each council when they get their results and look at the distribution-where it is good, where it is bad and how it compares with other areas. It will be a wake-up call and I would be astonished if it does not lead spontaneously to a revision of the priorities of local government and of course-it is happening already to some extent-of central government.
	Once you have got the measurements the next question is: why are things like this; what can be done about it? Of course, explaining the distribution of well-being-what are the causes of misery and happiness-should be, when we take into account the indirect causes as well as the direct causes, the main task of social science. We should think about the top priorities in social science.
	We already know a great deal about what are the really important factors and the noble Baroness has already said much of it. I would say that, first, comes health-and mental health above all-and next comes human relationships, family, work, community, and money also matters to everyone. However, there are two important qualifications to that on which I would like to spend a little time.
	First, in a country as rich as ours, relative income matters to people more than absolute income, and as our country becomes absolutely richer we cannot all become relatively richer compared to other people in our community; if some go up, others have to go down. This helps to explain why, as the noble Baroness said, there has been no increase in measured happiness despite the huge increases in absolute income experienced over the past 60 years.
	It follows from this that although we need to deal with our immediate problem of unemployment and unused human resources, we need growth in the sense that we need short-run growth to get back to a state of full employment. We should not confuse that with long-run growth, which is much less important. We are going to have to revise our priorities away from the presumption before that almost anything could be sacrificed for the sake of greater long-term growth towards one where we put more priority on human relationships relative to long-run growth. We have put excessive priority on long-run growth and we have allowed it to erode our relationships in the family, work and so on. We have allowed the banks to argue that we need a highly risky economic structure on the grounds that it might produce more and higher long-term growth and we should not continue to accept those kinds of arguments. They are probably not even true in terms of long-term growth, and they are certainly wrong in terms of our values. Economic stability is far more important than long-term growth. The other caveat about money is that an additional pound increases the happiness of a poor person more than a rich person. Roughly speaking, the value of money to a person is inversely proportional to their income.
	Finally, let me say a word about how the current actions of the Government stack up against the well-being objective. The Government face many constraints. They have made many important initiatives to promote well-being; in particular I would like to mention the one that the noble Baroness referred to: their commitment to complete the national rollout of improved access to psychological therapy. But if we look at the big picture, it is difficult to claim that the Government have prioritised well-being. Across income groups, the incidence of the overall cuts-including the expenditure cuts as well as the tax benefit changes-is affecting the poor more than the rich. This is inconsistent with what I said about the value of money to different parties. Across types of activity, the cuts are affecting our systems of human support for the young, the old and the unemployed more than they are affecting our capacity to produce long-term growth.
	In fact, the Government have recently been hinting that they want to switch expenditure from current expenditure, which provides support for the social sector, towards higher infrastructure spending. As a founder member of the movement called Action for Happiness, I constantly hear stories about the devastating effect of this in terms of human well-being.

Baroness Verma: Can the noble Lord come to an end?

Lord Layard: I have tried to present a balanced scorecard. When the Government talk about the importance of well-being, I think it is totally sincere. It is a concern shared by all parties, but when it comes to the Government's performance in delivering well-being, I am afraid that there is room for improvement.

Lord Wallace of Saltaire: My Lords, I very much welcome this debate. I share with the few who have spoken my enthusiasm for the topic and my view of its importance. I therefore much regret the very small number of people speaking from all Benches. I can remember five years ago or more, in my own party's federal policy committee, being told that to have a working party on well-being and happiness was a woolly liberal topic that would arouse the scorn of the media. I read a book on happiness by one of my LSE colleagues at the time, which many thought was a woolly liberal book, written by an economist who only dared to do so because he was about to retire. The quality-of-life paper which my party debated at its last September conference was excellent. It drew on much more research than I had until then known was available. It was probably the first serious political party document that took this debate on board. I am very sorry that the Labour Party is so absent here, because it is absolutely the sort of topic that it ought to be taking on board. It is part of what our colleague, the noble Lord, Lord Glasman, is talking about when he talks about Blue Labour; the importance of community; the importance of social networks; and the importance of the non-economic factors, which old Labour ignored so dreadfully when it was knocking down the old housing communities and putting up those great and soulless estates.
	The noble Baroness, Lady Tyler, says that this issue is starting to creep into the mainstream of public policy, and we must all accept that the word "creep" is important here. It has some way to go. It is also of course at the heart of the yet loosely defined concept of "big society" in the Conservative Party. I wish there were more Conservatives also taking part in this debate. There is a large cross-party, all-party debate to be had on this subject. It is still, sadly, only beginning.
	I am answering this debate because, as the Cabinet Office spokesman in the Lords, I am responsible for the Office of Civil Society and answer for the Office for National Statistics-although I stress, it is an independent body to which I am answerable, but have no influence over. I think that is a very important part of this debate, because if we are talking about getting more reliable measures-measures that everyone in the debate will trust and be able to argue over-we need something like an independent Office for National Statistics to be able to hold the ground on that. I very much welcome the work that it is doing and the encouragement that the Prime Minister is giving to that.
	The Stiglitz report, one of the key documents on this-after the book on happiness by the noble Lord, Lord Layard, some years before-says in its executive summary:
	"What we measure affects what we do ... Choices between promoting GDP and protecting the environment may be false choices, once environmental degradation is appropriately included in our measurement of economic performance ... if our metrics of performance are flawed, so too may be the inferences that we draw".
	The problem, as we all know, once one gets involved in this debate, is finding objective measures of well-being and of having to depend partly on subjective measures of well-being. The ONS is experimenting with different forms of subjective work. The international dimension of this-the OECD has already been mentioned-in the work of the Canadians, Australians and others, helps to feed in to a more informed debate. Sadly so far, on the whole, it is limited to the experts, think tanks and social science faculties, but I hope it will spill out into a national debate. As I say that, I can immediately see myself, or perhaps the noble Lord, Lord Layard, in front of Jeremy Paxman as he sneers, "Surely you don't believe that well-being has any relevance", let alone imagine what the Daily Mail will say about this. It is going to take a lot of time to build respect for a very important shift in the national debate. It starts from recognition that GDP as a measure of social progress is limited. It does not distinguish between economic activity associated with positive and negative social progress, such as the cost of long commutes, crime, divorce, dealing with natural disasters and so forth. It does not include those important functions performed in the household and voluntary sectors. What we are looking for is a means of measuring social capital and social added value as well as economic capital and economic added value.
	I note also in the literature, which I have read with great interest over the last few days, that there is the question of how one measures the quality of life as well as the quantity that one consumes. The Stiglitz report was extremely valuable as a way station in this. I very much welcome the way in which our Prime Minister has taken up the debate, started under the last Government and a number of international organisations, and has done his best to take it forward. I thoroughly enjoyed his excellent speech last November, in which he said,
	"it's high time we admitted that, taken on its own, GDP is an incomplete way of measuring a country's progress ... all of life can't be measured on a balance sheet".
	And he recognises that,
	"a new measure won't give the full story of our nation's wellbeing, or our happiness or contentment or the rest of it ... but it could give us a general picture of whether life is improving, and that does have a really practical purpose ... it will open up a national debate about what really matters".
	He continues that,
	"information will help government work out, with evidence, the best ways of trying to help to improve people's wellbeing".
	That is what the Government are engaged in. That is what the coalition parties are entirely signed up to. We very much hope that the noble Lord, Lord Layard, will in time persuade the Labour Party to sign up to it as well-perhaps, even, to understand the purpose of what is now under way.
	As has already been mentioned, the ONS is designing the best measures that it can and is undertaking a large-scale survey, the results of which will be published next July. I hope that will take us on to the next stage in a widening public debate. This will look at a range of areas, including social interaction, relationships, family, community, volunteering, the whole concept of fairness-relative incomes have been mentioned-and a sense of having control over one's own life. That is a very important set of questions. These are factors that can clearly be influenced and shaped by public policy. To make a slightly partisan point, my dislike for socialism was nurtured by being a candidate in Manchester and working on those huge rebuilt council estates. I fought a constituency in 1974 where 98 per cent of the population lived in council accommodation, mostly flats. I had some real argument with the city planners, who thought that they knew best what was needed for the people who lived in those houses. It was a concept of passive citizenship, in which people had things done for them but had no control over their own lives. That is part of what we have to reverse, and part of what Labour in particular has to reverse, in some of the old Labour thinking that is still there.
	We are making progress. Some of these data do not entirely relate to what government can do, but there are very wide implications for public policy across the board. The much greater importance that we need to give to the whole question of mental health is part of this. I thought that the Public Health White Paper took us one small step in the right direction in that. We all know that depression is the opposite of well-being, and looking at well-being takes us into that whole area.
	I myself am very much struck by the importance of the built environment. It is the opposite of the central Manchester council estates in Saltaire, which is a wonderful community. We are forced to live next to each other, because it is all terraced housing. We have green space-there is a park. There is an institute at the centre of the village, and we all as a result know each other and interact with each other. It has a real sense of social capital. Even from just spending the weekends there, I know many more people in Saltaire than I do in my neighbourhood in London. I hope that I do not sound too much like Prince Charles in wanting to build that sort of community, but there are some real questions about the lack of wisdom of building those new estates on the edge of towns with two car spaces outside every house where you absolutely do not interact with your neighbours. You do not have a local high street or a community pub, and as a result you grow up without interacting with your neighbours. So neighbourhood, community and a sense of self-control are all part of this.
	That takes us on to the localism agenda, which the coalition agenda is developing. We still have quite a long way to go. Being in control of your own lives also means having more self-government; it means encouraging active citizenship. Many of us also think that it means more urban parish councils and more local, local government. That is something that we have to work on to reverse the alienation of so much of our population from our current style of politics, with the passive observance of Prime Minister's Question Time as a form of distant entertainment that in no sense involves you.
	So this has very large implications for consumer culture and the extent to which marketing and advertising encourage people to substitute buying things for actually thinking what they really want. There is the question of how far government policy should attempt to alter the way in which marketing and advertising go. There is the whole question of social trust and social capital. So we have a very long way to go.
	I welcome the little remnant of us who have taken on this debate, all calling for a wider national debate, which shifts the national debate on to a new ground. It is a huge challenge to the conventional wisdom and a challenge to all political parties. It is also a challenge to the economics profession, which I hope the noble Lord, Lord Layard, continues to push. I hope for further debate in this Chamber as part of the wider debate, and I suggest to the noble Lord, Lord Layard, that he persuades Labour Peers to give the subject a full Thursday afternoon debate, or as full as possible, because this is a challenge to us all.
	Sitting suspended.

Welfare Reform Bill
	 — 
	Report (2nd Day) (Continued)

Clause 12 : Other particular needs or circumstances
	Amendment 21A
	 Moved by Baroness Meacher
	21A: Clause 12, page 5, line 38, at end insert-
	"(d) the fact that the claimant is a severely disabled person and no one is in receipt of a carers allowance or a carers premium for looking after them."

Baroness Meacher: My Lords, Amendment 21A seeks to provide for an addition within universal credit that is similar to the severe disability premium. The addition would be paid to those living alone, although it would not be restricted to that group. It would not be paid to a claimant with a carer who receives either the carer's allowance or the carer's premium. The point of the amendment is to provide for severely disabled people who do not have a carer, and for those who have a carer but who cannot qualify for carer's allowance because, for example, the carer is a student or a child. To achieve this result on a cost-neutral basis would require the level of benefit for the support group to fall slightly. The amendment, however, would ensure a fairer outcome than the Bill achieves.
	The severe disability premium, which the Bill abolishes, aims to meet the extra costs experienced by disabled people living alone and is currently worth £53.65 per week for a single person. It helps people who are on a low income, whether in or out of work, who have a severe level of disability and who have no one living with them who can help them. It is well recognised that people in this position face much higher costs than other disabled people with a comparable disability.
	I recognise that the Government plan to abolish the severe disability premium, but that plan is not designed to save money. The Government will instead transfer the money to fund an enhancement of the support group benefits. I understand, having just had a brief conversation with the Minister, that the increase will be something in the order of £44. However, the loss of the SDP will also apply to people who live alone and who move into the support group after these changes occur, so this very disadvantaged group will in fact lose out-although by something in the order of £8 a week, as I understand it. The support group people will lose the £53.65 per week, minus the uplift to support group benefits in the order of £44.
	The reason why the transfer of funds from the severe disability premium to the support group might not be fair and efficient is that the costs of disability do not correlate well with the level of impairment, which is what will determine whether a person qualifies for the support group. The recent Demos/Scope report, Counting the Cost, based on a survey of 845 disabled people, found little correlation between the costs of disability for an individual and their level of impairment. It is quite difficult for someone such as me, who is not disabled, to understand quite how that works in practice but maybe others in the Chamber can illuminate that for us.
	The relevant point here is that the severe disability premium targets help where it is most needed-on the additional costs that people have to pay because of their disability. Because this amendment will ensure that the SDP-equivalent benefit is payable only to those who receive either the middle or the highest rate of the care component of DLA, only those with frequent care needs throughout the day will qualify. It should be said that these care needs have to be for personal care rather than for the more mundane sort of activities such as shopping or housework.
	The groups who would benefit from this amendment include those who become eligible for the support group after the introduction of universal credit but who live on their own and do not have a carer. These groups will include new cancer sufferers, for example, and those with a new and severe impairment. Without this amendment that group will lose the £53.65, as I have said, although they will recoup a fair proportion of that through the higher support group payment. Another group that would benefit from the amendment are those who are entitled to the middle rate of the care component of DLA but who are in the work-related group, or perhaps even found fit for work.
	Going to work costs money, of course, particularly for disabled people who might not be able to use public transport alone, for example. Under the current system, a severely visually impaired person living on their own and earning £100 a week will have a disposable income of £188 per week, after housing costs have been paid, plus their disability allowance. Under universal credit the same person will, as I understand it, be little better off than someone without an impairment. That must apply to those who do not actually make the support group assessment. If you are assessed as not having a sufficient impairment to justify the support group benefit, obviously you are in a very different situation.
	Young carers will also benefit. Severe disability premium has played an essential role in supporting young carers. If a lone parent is severely disabled and their child acts as a carer, the child cannot claim carer's allowance but the family can benefit from the extra financial help offered by the SDP payment. As I suggested at the beginning, this amendment is not designed to increase costs but rather to ensure that the money is not transferred from very needy groups to others whose impairments might be more severe but whose financial needs might be less. The issue is that these are different assessments, and come out with different results.
	The Government strongly support the careful targeting of precious taxpayers' money. This amendment seeks to support the Government's objective, and to improve the fulfilment of that objective more effectively than the Bill currently does. I should say that this is a probing amendment, but I hope the Minister will understand the problem that I am raising and will consider a way forward. I beg to move.

Baroness Grey-Thompson: My Lords, I rise to support the amendment of the noble Baroness, Lady Meacher, and to look specifically at the removal of the severe disability premium and the effect that it will have on young carers who are looking after a lone parent who is disabled or two parents who are both disabled.
	The severe disability premium is really important in supporting young carers. Children who are still in full-time education cannot claim carer's allowance, but many play an invaluable role in supporting disabled parents. However, if there is no other adult in the household, and no one claiming carer's allowance, the family can benefit from the extra financial help offered by the SDP.
	The abolition of the SDP will cost families with a young carer up to £55.30 per week, which is £2,876 per year. This cost could be equivalent to 20 per cent of household income after housing costs. The Department for Work and Pensions estimates that around 25,000 lone parents are in receipt of severe disability premium. That is 25,000 families with a disabled adult, in receipt of the mid or high-rate care component of DLA, but with no adult either in the household or receiving carer's allowance to look after them, and with children in the household.
	Many of these children are likely to be doing a substantial amount of caring for the parent, but this measure could force them to have to take on additional caring and household responsibilities because the family just cannot afford to pay for help. This is likely to put additional pressures on their children to make up for this loss of additional care. This is happening at time when support services for young carers are being cut back, according to a recent survey by Action for Children. The charity surveyed 23 of its young carer projects between May and June this year. Findings reveal that almost half of services questioned reported a rise in the number of children on waiting lists and had seen an increase in the needs of young carers.
	The Children's Society, which works with young carers, gave the following example of the pressure that some of these children face and why they should not be pushed into even tighter financial circumstances. Kelly's mum, Jenny, became ill about 10 years ago when she was only 8 years old. An aggressive illness hospitalised Jenny, and has since entirely paralysed her down one side. After staying with relatives for several months while her mum was in hospital, Kelly was able to move back in to live with her mum from the age of nine. Since then she has cared for her mum non-stop. She makes meals and does the washing and cleaning. She said early on that she could only make simple dinners such as scrambled eggs on toast, but she has learnt quickly, and she has had to. She does not do it alone; she has a rota of professional carers who come to help out day to day, but they cannot do everything, and they do not stay overnight.
	About three years ago, the year before Kelly was due to sit her GCSEs, Jenny became extremely ill for a while. Kelly had to get up around four times a night to help her out. Naturally, she was exhausted, dragging herself to bed as soon as she got in from school. Jenny currently receives the severe disability premium, meaning that she and Kelly are just one of 25,000 families with a disabled single parent. They will presumably be covered by transitional protection, unless Jenny's re-assessment for ESA from IB is viewed as a change of circumstances. It would be useful if the Minister would be able to clarify that. However, families who find themselves in a similar position after the measure is brought in are likely to be left £55 a week worse off as a result of losing this premium.

Lord McKenzie of Luton: My Lords, we should be grateful to the noble Baronesses, Lady Meacher and Lady Grey-Thompson, for introducing this important issue on which we have all received representations. Quite a lot of numbers have been bandied around with particular reference to benefits, and I will be interested in the Minister's response. As I understand it, in the current system the severe disability premium is paid to people, whether in or out of work, who receive at least middle-rate care, live on their own and do not have a carer. It is payable only as a means-tested benefit so it supports those with a severe disability who have a low income and face many extra costs as a result of living alone.
	Alongside that is the disability element of the working tax credit, so under the present system someone who is entitled to DLA or has recently been receiving a long-term sickness benefit would be entitled to the disability element of working tax credit if they worked for at least 16 hours a week. That is where we start from. As we have heard, though, the proposed support for adults in the universal credit depends upon the gateway of the WCA. This is what will drive the new arrangements. The briefing that we have had says that only those with a level of impairment sufficient to be found not fit for work will receive any extra help. I am not totally clear whether in that context "not fit for work" means someone who would only be going to the support group or someone who was going to the WRAG as well. I think the Minister is shaking his head, or rather he is nodding to say that only those who in the support group would receive that.
	That creates the difficulties that have been spoken about. The changes would mean that someone who could self-propel a wheelchair 50 metres or was registered blind but could undertake a journey unaccompanied could be found fit for work or, presumably, for work-related activity. Of course no one would want to claim that such individuals could not be encouraged to work if they wanted to, but that does not mean that they do not face considerable disadvantage and cost compared with someone with no impairment. So if they are out of work but found fit for work they face the same conditionality as everyone else, but if they are in work, because the gateway for extra support within the universal credit is the WCA, someone who is found fit for work will receive no extra support in work. The juxtaposition of the present and the future is concerning.
	I am sure that the Minister will have seen the briefing that we have had. It says that the following are some of the ways in which different groups will be affected. Those who are terminally ill or who develop a severe level of impairment and live on their own could be disadvantaged to a significant degree-by something like £50 a week. Someone who is entitled to a middle rate of the care component but found fit for work-for example, someone who is severely visually impaired-will in many cases be found fit for work. However, if they are living on their own and doing some work, they are likely to have considerable extra costs that are not met by the DLA or by PIP when it comes along. Currently, most would be entitled to at least the middle rate of the DLA care component and therefore the SDP.
	Under the current system, a severely visually impaired person in the work-related activity group and living on their own earning £100 a week will be left with a disposable income of £188 a week plus their DLA, after housing costs are paid. Under the universal credit, the same person will be left with a disposable income of less than £100 a week plus whatever PIP is payable after housing costs. There are plenty of other examples and we have heard some of them today from the noble Baronesses. These sorts of disparities are quite disturbing. The Minister might say that these are quite specific and narrow examples of the full spectrum of people who are affected by this, but a serious issue has been raised here and we need to understand fully how people are being protected in comparison with the current system under the new world of the universal credit.

Lord Freud: My Lords, this amendment seeks to put an additional element into the amount of universal credit that is payable for those who are severely disabled and who have no one receiving either carer's allowance or a carer's premium for looking after them. In essence it seeks to recreate the current severe disability premium within universal credit. As such it would involve a significant increase in cost compared with the Government's plans. That increase stands at £400 million, unless there were other readjustments. However, let us just take it at face value. At face value, it is unaffordable.
	On Monday the House approved the Government's plans to simplify the disability-related additions. Instead of the seven different components within the current system of benefits and tax credits for adults, and two further rates in child tax credits for disabled children, universal credit will just have two rates for both adults and children. By restructuring the rates in this way, we are not looking to make any savings. We are redistributing around £800 million of current spend without returning any savings at all to the Exchequer. The full amount will be reinvested by increasing the higher rate for more severely disabled people. In our policy briefing note we made it clear that there would be some phasing. I know that I owe the noble Lord, Lord McKenzie, a letter on that matter.
	Once resources became fully available, we expected to be able to provide a higher rate, at around £77 a week. This is significantly higher than the current £32.35 payable as the support component within ESA: £44.65, to give the noble Baroness, Lady Meacher, the exact figure she was seeking. It will provide a much more meaningful amount to severely disabled people than the current patchwork of premiums, which gives some people more than others and makes it difficult for people to understand and obtain their full entitlement. I should make it clear that one of the features of the universal credit as a whole is that we are expecting a substantial amount of the gains to the poorer people to come from much better take-up. The simplicity of a system with automatic provision of everything that people are entitled to will mean that more people in this category are likely to be recipients and get what they deserve.

Baroness Meacher: It would be helpful if the Minister could explain whether there is any provision in the new system for child carers, where the mother might not be in the support group. You have to be very disabled, as I understand it, to be in the support group. Yet a mother might need her child to do an awful lot in the home: shopping and cooking and all the rest of it. Is there any provision for her?

Lord Freud: My Lords, I will come to that. What we are dealing with here is rather interesting, as we move from one system to the universal credit. We are dealing with the current system as it exists on paper, we are dealing with where we want to go in the universal credit, and then we are dealing with something in the middle, which is how things actually work on the ground. This is one of the areas in which things are working on the ground as they are not really meant to. It is simply not the role of the severe disability premium to provide money for young carers. Clearly young carers could be affected if they are providing support for a disabled parent who receives the severe disability premium. Under the current system, the youngster gets it because there is no adult in the house looking after them and they are not allowed to receive the carer's premium. It is one of those things that has unintentionally fallen through the cracks. It was simply not intended as a support for young carers; it was designed to support severely disabled people who live alone.
	As I said in Committee, the needs of young carers cannot be dealt with effectively through the social security system. The noble Baroness, Lady Grey-Thompson, gave us a very moving example. One could not help but be touched by that story. The Government's carers' strategy, published last year, made it clear that support for young carers should focus on achieving their educational and employment potential, and that they should have the same opportunities as other young people, without assuming that they should always be a carer. In achieving this aim, the primary responsibility for supporting young carers must lie with local authorities and social services, not with the social security system. That is the right place for it to be.
	The other point that I need to make, going back to the main thrust, is that it is right to target additional support for severely disabled people in universal credit on cases where the work capability assessment has established that there is limited capability for work and work-related activity-that is, on severely disabled people who have the least opportunity to work. Noble Lords are concerned that some disabled people who currently get additional premiums will in future get the lower addition in universal credit, equivalent to the work-related activity component in ESA. That is why we are providing transitional protection for those claimants with existing premiums whose overall universal credit entitlement would be less than under the old system as a direct result of moving to universal credit, provided their circumstances stay the same. In response to the question from the noble Baroness, Lady Grey-Thompson, on defining transitional protection, we are still working on pinning that down with precision. We are also looking at the interaction between ESA migration and the move to universal credit.
	The structure that we have is a means-tested universal credit. We have deliberately kept the extra costs of disability outside, within the DLA and to be within PIP. That is the structure and it is not means-tested for the deliberate reason that the extra costs of disability are there regardless of whether you are in work. Regardless of your level of income, you have extra costs as a result of your disability, so it is structured in that particular way.
	In conclusion, the amendment would return us to the complexity of the existing system and would entail an additional cost of around £400 million, unless there were other changes to the amendment. I can assure noble Lords, from the bottom of my heart and with scars on my back, that the £400 million is simply unaffordable right now. Therefore, I urge the noble Baroness to withdraw the amendment.

Baroness Meacher: I thank the Minister very much for his response. Certainly, the idea was that this amendment should be cost-neutral and a redistribution between the support group benefits and this benefit. There will obviously be significant losers in this; child carers will certainly be among them. I do not envisage local authorities picking up the tab in the years ahead. There are very real concerns but, at this time of night, I must accept the Minister's response and withdraw the amendment.
	Amendment 21A withdrawn.
	Clause 13 : Work-related requirements: introductory
	Amendment 22 not moved.
	Clause 15 : Work-focused interview requirement
	Amendment 23
	 Moved by Baroness Turner of Camden
	23: Clause 15, page 7, line 13, at end insert "but a claimant unable to comply with the requirement to attend for interview may provide evidence to the effect from a health care professional as defined by section 16(6)"

Baroness Turner of Camden: My Lords, this is a very short amendment which I came to as I leafed through the Bill before writing any amendments down. It is an attempt to amend and make clear what is meant by work-focused interview requirement. The Bill states:
	"The Secretary of State may specify how, when and where a work-focused interview is to take place".
	We must bear in mind that we may be dealing with a number of people who are not terribly well or who are not very well clued up about what arrangements are necessary. There would, presumably, be some sort of sanction if the claimant did not turn up. I have therefore drafted an amendment which enables a claimant who cannot comply with the requirement to attend a work-focused interview to provide medical evidence to say that, on that occasion, they are not able to turn up. In that way, they would avoid any sort of sanction which might exist. I hope that this, or something like it, will be acceptable to the Minister. As we are dealing with people who are often not very well, I am trying to make it clear that there is no sanction if they simply cannot make it.

Baroness Drake: My Lords, I have Amendments 23A and 24A in this group. Amendment 23A requires the Government to have regard to the interests of the child when operating work conditionality and work availability requirements under universal credit. Work availability applies not only to those seeking work but can set requirements on those in work to increase their hours of work or to seek higher paid work. This conditionality has acquired greater significance because the Government will expect people with children aged five and upwards to be subject to full work requirements and are extending full work requirements to couples with children.
	I do not seek to make a speech about what the needs of the child are and I do not seek to debate the detail of how work availability requirements will operate, though I have my opinions. What I do seek is to place a requirement on the Government to implement and operate work availability requirements with reference to the interests of the child of any carer subject to work conditionality. Universal credit imports a novel and extensive level of discretion over a sizeable section of the working-age population and powers to follow through with sanctions. However, a policy that is premised on the belief that parents and their attitude to benefit or responsibility are better if they work has to be balanced by the need to protect the interests of the child of the carer, subject to such conditionality.
	It is not a question of whether we do or do not accept the Minister's assurances; I am sure he gives them in good faith. But those assurances are not of themselves sufficient. If the Government want to take, for the Secretary of State, a powerful range of discretions necessary to apply work conditionality, which even the Minister admits is not fully defined or refined operationally, then Parliament should require the Secretary of State to exercise those discretions with reference to the needs of the child whose care will be impacted by the application of that discretion.
	In response to concerns on this matter expressed in Committee, the Minister said:
	"Jobcentre Plus does not dictate to parents the type of childcare or which provider they should use".
	He added:
	"Advisers will continue to have an important role in both challenging and supporting parents who may have preconceived ideas about childcare".
	Furthermore, he said:
	"Where the adviser considers that the parent has not taken reasonable steps to identify or access appropriate childcare they will refer the question to a decision-maker. The sanction will only be imposed if the claimant does not have a good reason".-[Official Report, 26/10/11; col. GC 326-327.]
	He had earlier said that,
	"in due course we will provide more detailed guidance on how the system will operate in practice".-[Official Report, 26/10/11; col. GC 296.]
	That is a lot of guidance, a lot of discretion and a lot of work still to do, even though some reassurances are given. Currently, there is also a lack of clarity as to what would or would not be a good reason for a carer not to have access to childcare.
	The amendment does not seek to answer those questions but seeks to insert in the Bill a requirement that the work availability requirements have to operate by reference to the interests of the child or any carer subject to them. Amendment 24A seeks to exempt family and friends, and kinship carers, from the conditionality requirements to seek work for a period of 12 months when they take on a child or children who cannot live with their parents because of parental death, drug or alcohol abuse, serious illness or imprisonment-most of whom would otherwise end up in local authority care. These carers are doing an enormous service, both to the vulnerable children and the state. Such carers often step in in extremely difficult circumstances, often at short notice, and voluntarily embrace responsibility to protect the child. Such children are covered by an order under one of the various provisions laid out in this amendment.
	It is important to remind ourselves that we are talking of a population of some 200,000-plus highly vulnerable children who are being raised by grandparents, older siblings, other family members or friends. If just 5 per cent of the children currently in family or friends' care were in independent foster care, this could add £500 million a year to the cost of providing for children in care. A number of provisions in the Bill could unintentionally disadvantage family and friends carers, and one certainly wants to avoid the risk of children needlessly being taken into care. These include not only the conditionality requirements I am referring to but other matters such as the benefit cap, to which I hope to return.
	However, it is important to recognise that three in 10 family and friend carers give up work when a child moves in, and a similar number reduce their hours, often because they are told to do so by a social worker because of a trauma that the child has experienced that has led to them being taken into the family and kinship care. Many of the social workers feel that the carers have to do this in order to meet the child's needs. Someone who adopts a child is entitled to adoption leave, but family and friends carers have no such entitlement to help them to settle a child-during what is often a very difficult period when they first arrive-and cope with the upheavals in their lives. They often have to take on these children without notice and often to avoid the children being taken into care.
	In Committee, an amendment was tabled to give working-age family and friend carers exemption from conditionality requirements for one year after a child moves in. I recognise that I may not have the influencing powers of my noble friend Lady Hollis of Heigham, but it is very much welcome that in Committee the Minister made a very intelligent observation when he recognised the enormous contribution that family and friends carers make to society and children, and that it makes good sense to support them. I quote the noble Lord, who said:
	"I am absolutely convinced that this is a key area and am currently looking closely at ensuring that this group is treated appropriately under the universal credit ... However, we recognise that clarity of treatment and a clear legislative exemption could be of value".-[Official Report, 26/10/11; col. 338.]
	The Minister concluded:
	"I am on the case".-[Official Report, 26/10/11; col. 341.]
	I am delighted by that. I hope that he is still on the case. I urge him to translate his warm words into action by supporting the amendment.
	If the Minister is unwilling to accept the amendment, will he instead be willing to commit to introducing protection for kinship carers through regulations? I specifically ask him commit to include in regulations that there should be an exemption for conditionality requirements for family and friends carers for one year after taking on the care of a child who is not their own; and that family and friends carers who are required by the local authority to give up work who reduce their hours to look after such a child or children will be entitled to have their jobseeking requirements switched off or constrained for the duration of that requirement.

Lord McKenzie of Luton: My Lords, I speak initially to Amendment 26. The amendment takes us into the as-yet uncharted waters of in-work conditionality-waters into which my noble friend Lady Drake has at least dipped her toe.
	The Bill introduces for the first time the requirement on claimants who already have a job to take action to secure more paid or better paid work. We understand the need, within a system that has no clear distinction between in-work and out-of-work benefits, to have some mechanism to ensure that people do not simply reduce their hours of work to take advantage of the more generous support for lower-hours jobs that universal credit provides, but there are a host of unanswered questions about how in-work conditionality will work. The amendment is intended to ensure that Parliament has an opportunity to review the arrangements once they have come into force.
	We debated these questions at some length in Committee, and the Minister's response was basically, "We are thinking about this", with some indication that he would not be in a huge hurry to introduce this element of the Bill. The most fundamental of those questions is: what exactly is taken to be work in the context of universal credit? When will the state judge that someone is doing enough to be free of the requirement to report on their activity to the jobcentre? Although we have some indication that single people with no caring responsibility or health issues will be expected to work for 35 hours a week, and couples in the same situation for 70 hours, we have no idea what flexibility will be given to those whose circumstances mean that that is not reasonable.
	For example, what will happen if one partner of a couple decides to reduce their hours-perhaps to look after children? The way that the incentives are structured within universal credit may encourage many second earners to do just that. Will they then face a jobcentre penalty for not engaging in sufficient work?
	It is also unclear exactly how the in-work conditionality provisions will impact on the employment relationship. How will it impact on the likelihood of employers offering somebody a part-time job if they know that the jobcentre will be encouraging them to leave their job for one with longer hours? We know that, despite today's employment figures, some unemployment was avoided at the start of the recession due to employers reducing people's working hours rather than making redundancies. Would they have been penalised for reducing hours in that way under the Bill? The in-work conditionality proposals will bring many more people into the orbit of Jobcentre Plus at a time when the agency is being asked to make challenging efficiency savings. Can the Minister outline what estimate he has made of the additional resource that will be needed to deliver conditionality for in-work claimants and whether he expects to be able to secure that?
	In Committee we discussed the position of the work programme providers under these provisions. The Minister assured us that the fact that work programme providers must get somebody into work for 16 hours and keep them there for two years was not in conflict with the aim of this part of the Bill to ensure that somebody leaves a 16-hour job and goes into one that either pays more or has more hours of work each week. A review of this provision after a year will enable us to see whether the Minister's confidence is justified.
	Finally, we have had no equality impact assessment on this proposal. A review would enable us to assess its impact on different groups. As the proposal intends to assess whether somebody is fulfilling their in-work conditionality requirements by looking at how much they are earning rather than how many hours they are working, for those who earn more these requirements will obviously be easier to meet. I hardly need remind noble Lords of the substantial pay penalties faced by women, by people with disabilities and by certain ethnic groups. We will need to look carefully at whether people within these groups are significantly disadvantaged by these proposals.
	This amendment in effect accepts the assurances that the Minister gave us in Committee that these matters are under consideration and simply asks him to report back to Parliament on how the proposals are operating in practice. I am sure that he will want to accept it, if only in order to be able to demonstrate that, as we all hope, this policy is achieving its intended aim of supporting people to move on in work.
	I move on briefly to the contributions of my two colleagues. As well as talking about the very important issue of the focus on children being the driver of these provisions, the noble Baroness, Lady Drake, referred again to kinship carers. The amendment that she spoke to seeks to add kinship carers, carefully defined, and limited to the first year in which they are caring for a child, to the existing list of exemptions. When we debated this issue in Committee, my noble friend Lady Hayter said that she was able to rip up her speech given the willingness of the Minister to recognise this issue, suggesting that he was looking to address it. My noble friend, who has provided me with the text this evening, says that she is perfectly happy to rip up another one if the Minister can let us know the results of his deliberations and what these have been.
	I will not repeat the powerful case made by my noble friend Lady Drake. As she emphasised, kinship carers can play a vitally important role, offering children in extremely vulnerable situations some family continuity and, in doing so, saving the state the considerable costs of taking a child into care-some £40,000 a year in independent foster care. The Who Cares? Trust has highlighted the difficult experiences of many children cared for by their parents, estimating that one-quarter will have lived with abuse, neglect and violence and one in four will have been deserted by their parents, often after drug and alcohol abuse. Sixteen per cent go to their grandparents after family breakdown, one in 10 after a parent's illness-often mental illness-and one in 10 after the death of a parent.
	Although the existing conditionality arrangements provide some protection to those caring for young children, with no conditionality until the child is one, and then work-focused interviews until the child is five, many of the children who move to live with kinship carers will be older than five, as older children-indeed, those over 12 years old-make up a higher proportion of those in kinship care than in the wider population. Despite not being babies, for obvious reasons they need pretty much full-time attention and care. They will be new family members when they arrive, yet, not being adopted, will have no equivalent recognition. They also usually arrive after some sort of trauma and are therefore likely to take time to settle down. The amendment my noble friend spoke to simply seeks to provide for those who take on the care of a related child a year in which they will not be asked to look for work. This will give those considering taking on this huge task some certainty about their income and security during this first year and a chance to focus on their care for the child. A year's exemption from looking for work would give them time to manage the upheaval in their lives before starting to juggle work and care.
	Our concern, expressed by my noble friend, is that, without this amendment, the Bill risks undermining families' capacity to care for children and increases the likelihood of those arrangements breaking down. Unlike with formal adoption, there is no adjustment period for family carers, despite the needs of the children. Furthermore, carers often have to give up work as a condition of a placement. We are aware that, as my noble friend said, the Minister is sympathetic to this case and we look forward to hearing his response.
	Finally, I should like to refer briefly to the contribution of my noble friend Lady Turner of Camden in relation to Amendment 23. As she explained, this amendment seeks to ensure that evidence from a health professional will be accepted as good reason for failing to attend a work-focused interview-a requirement that will, under the Bill, primarily be placed on lone parents with children aged between one and three. We hope that this will be a simple amendment to accept, as my noble friend has explained. In Committee, the Minister told us:
	"We will not sanction claimants with limited capability for work, or those who have learning difficulties or mental health conditions, without first making every effort to contact them, their carer or healthcare professional to ensure that they have fully understood the requirement placed on them and had no good reason for failing to meet it".-[Official Report, 1/11/11; col. GC 417.]
	We hope that the Minister will be able to extend this to include those who provide their adviser with evidence that they have a health-related reason for failing to comply with the work-related requirement.
	This amendment also enables us briefly to revisit the question that arose in Committee about the relationship between Jobcentre Plus advisers, Atos assessors and the healthcare professionals who deal with a claimant. It also enables us to ask the Minister again to clarify exactly what information is available to Jobcentre Plus and work programme advisers, who have to decide on the type of requirements to which the claimant should be subject. Will they have access to information about a claimant's health and capability for work that has been uncovered during the assessment phase for employment and support allowance?
	We want this whole scheme to work to help those who can be helped but not to waste advisers' time, nor to bring the system into disrepute by demanding inappropriate behaviours of claimants where evidence of their health needs exists within the system. Therefore, we hope that the Government will feel able to accept my noble friend's amendment.

Lord Freud: My Lords, this group of amendments contains a number of measures that align with our intentions, so we are apparently in agreement. Indeed, many are in line with current practice and we intend to carry them forward into universal credit. I shall take each of them in turn.
	With regard to Amendment 23, we recognise that there may be medical reasons that prevent a claimant attending a work-focused interview. We do not need expressly to legislate for this to be recognised. If a claimant gives advance notice that he will be unable to make an appointment and has good reason for this, the interview can be rearranged. If a claimant fails to attend an interview, he will have a reasonable period of time to explain why. As part of that explanation, the claimant will be able to provide any relevant information, including any medical evidence. If the claimant has a good reason, then obviously no sanction will be imposed. This is essentially what happens already and it will continue.
	I turn to Amendment 23A in the name of the noble Baroness, Lady Drake. I appreciate the sentiment behind the amendment and agree that it is important to balance the requirements placed on claimants with any childcare responsibilities they may have. Therefore, legislation will provide clear safeguards, ensuring that no claimant who is responsible for a child under five can be made to look for or take a job, and no claimant with a child under 13 will be required to look for a job that does not fit with their child's school hours, including a reasonable allowance for travel time.
	Advisers will have flexibility to tailor the requirements placed on claimants-including allowing limitations to the work that claimants must search and be available for-to take account of their circumstances and the needs of any children for whom they are responsible. Where the child is over 13, advisers will continue to have discretion to permit the claimant to limit their availability if the child's needs make it necessary. We do not intend to make blanket rules for this age group in legislation, as the children's maturity and need for parental supervision will vary widely. Therefore, although we agree with the spirit behind the amendment, we do not think it necessary.
	On Amendment 25, we are now making provisions in the jobseeker's allowance on domestic violence. The regulations giving effect to this policy will be subject to affirmative debate early next year as parliamentary time allows. The changes will take effect soon afterwards. The draft jobseeker's regulations will provide that where a claimant has left the abuser because of violence or the threat of domestic violence, they will be treated as complying. This will be automatic whenever the claimant provides evidence of violence or the threat of violence and may be extended through existing domestic emergency provisions to up to 17 weeks, or to 24 weeks for claimants with childcare responsibilities. The amendment would allow an exemption from work-related requirements only while the threat continues. Our proposal recognises that claimants may need unconditional support for a period after the actual threat has receded.

Baroness Lister of Burtersett: We are very pleased to hear that. Can the noble Lord tell us what definition of domestic violence the Government have in mind? They are consulting at present on the question of domestic violence and I wonder what the implications are for this provision.

Lord Freud: I am going to have to write with a precise definition of domestic violence and the threat of domestic violence.
	Turning to Amendment 26, we are all too well aware that in-work conditionality is a difficult and contentious area. In this debate and in Committee noble Lords raised a number of concerns and questions. I think that I have been open enough to admit that I do not have all of the answers to those questions right now, but I hope that I can provide some real reassurance by describing our planned approach. We are going to take some time to get this right, because it is a new area. I said in Committee that there may be a role for piloting and I can now be much clearer on that.
	We have decided that when universal credit is launched we will not be imposing conditionality on claimants with income or earnings which would, broadly speaking, have taken them over the cut-off point for the current out-of-work benefits. So we are effectively continuing with the current system. Rather than a review, our approach will be to pilot the application of conditionality on claimants whose income is above this level. We will want to gather views on the sort of approaches that could be tested and I commit to publishing the details of these pilots. We will then reflect on the results of that process before adopting any national approach.
	Finally, turning to Amendment 24A, I have listened very carefully to the feelings of noble Lords on this and again let me say that we are of one mind on this matter. Work is already underway, as I said in Committee, around how kinship carers should be treated for conditionality purposes. I agree that kinship carers who need a period of adjustment should be given time to return to a stable footing before being expected to meet work-related requirements and juggle conditionality with new caring responsibilities. Advisers will have discretion to lift temporarily the requirements on individual claimants where a child's needs are such that the claimant must be able to provide full-time care. I repeat what I said in Committee. I recognise the potential for value and clarity in a legislative exemption from conditionality and we are carefully considering options for further provisions. The Bill provides scope for flexibility in this area and we have powers to make regulations as necessary. These things take time, but I can assure noble Lords that work is progressing. I am on this case. We are currently talking to the Department for Education-

Baroness Drake: I shall not miss any opportunity on this because I know that this important community will hang on the Minister's every word-and I say that in the warmest sense. The Minister said that advisers would have the discretion to lift the conditionality and, at the same time, he repeated the reference to the value and clarity of legislation. If I may push him, is he saying that guidance and discretion around guidance are not of themselves sufficient to address this community?

Lord Freud: I think what I am saying is that you can take away the discretionary elements of support for this community, and that is already in the bag. I would like to add more to that, and that is what I mean when I say that there is value in legislative exemption. Then I move on to say that I am working on it. I am seeing some noble Lords who are familiar with government having a good giggle because they know exactly what is happening and they giggle with reality.
	The way I have to express this-again, some noble Lords will recognise this better than others-is that doing more for this group may come at a cost, and we are operating in difficult financial times. I reiterate that I have a real interest in this area, and when I am able to give firm answers, I will do so. This is a matter with which we will deal in regulations rather than in primary legislation. On that basis I urge the noble Baroness not to press her amendment.

Baroness Turner of Camden: My Lords, I thank the Minister for his response to my amendment on the requirement to attend work-focused interviews and for his promises. As for domestic violence, I did not get around to speaking to my amendment mainly because it was grouped with a number of other amendments and was not called. However, I am very obliged to the Minister for what he said about domestic violence. I beg leave to withdraw the amendment.
	Amendment 23 withdrawn.
	Clause 18 : Work availability requirement
	Amendment 23A not moved.
	Clause 19 : Claimants subject to no work-related requirements
	Amendment 24
	 Moved by Baroness Morgan of Drefelin
	24: Clause 19, page 9, line 16, at end insert-
	"(e) the claimant is receiving specified treatment for cancer, is recovering from that treatment or is likely to receive such treatment within 6 months"

Baroness Morgan of Drefelin: I shall speak also to Amendment 47. First, I want to declare an interest as chief executive of Breast Cancer Campaign. I am grateful to have the opportunity to speak to these amendments that aim to ensure that cancer patients awaiting, receiving or recovering from chemotherapy or radiotherapy will automatically qualify for the employment and support allowance support group without having to undergo an assessment. I have to admit to being disappointed that we have had to come to the point where it is necessary even to lay these amendments now. This is a debate that we should have had in Committee, but we were unable to do so because at the time the outcome of the Harrington review and the Government's response to it were not known. That is why we are having what is probably a Committee stage debate now-although obviously within the correct procedure for Report.
	While I am sure the Minister will be able to highlight technical flaws in the wording of the amendments, I hope that the discussion today on these amendments will focus on the intention behind them, which I believe is clear. I am sure that if there are technical flaws that need to be addressed, they can be looked at for Third Reading.
	Over several months, we have heard a number of seemingly very reassuring statements from the Government in relation to employment support allowance and supporting people with cancer. I note, for example, the response by Chris Grayling MP, the Minister for Employment, on 18 October to a Written Question, in which he said:
	"Ministers have had a number of discussions with Macmillan Cancer Support since the spending review announcement, as we are determined that the benefits system should support people who are diagnosed with cancer in the most sensitive, fair and appropriate way. The Department has no interest in making it harder for those who cannot work to claim benefits and is committed to an ongoing process of review and improvement".-[Official Report, Commons, 18/10/11; col. 930W.]
	That was a very reassuring statement.
	Unfortunately, the recent publication of the Harrington review and the Government's response to it resulted in anxiety across the cancer community. I have listened to the views expressed by organisations such as Macmillan Cancer Support and others and am sorry to say that I am not reassured by the news that the Government are considering withdrawing automatic qualification for the support group of ESA to those on non-oral chemotherapy-commonly referred to as IV chemotherapy-instead of extending the exemption to cancer patients receiving oral chemotherapy. In effect, that is going in exactly the opposite direction of that pointed to by the Minister for Employment.
	We know that Macmillan Cancer Support undertook an expert consultation on this matter for the Harrington review. It did an enormous amount of work and I pay tribute to it for it. There is no doubt that the recommendations produced by it through consultation with an expert group of clinicians have not been adopted. Macmillan has been very clear on this point. I have had a look at the government response and it seems that Macmillan is making a fair point.
	The Minister will no doubt suggest, as he has done previously, that the Government's response is not contrary to Macmillan's conclusions. However, it is my understanding that while the clinicians consulted provided the charity with a range of views-Macmillan has been totally transparent about all the views that it has received-a clear consensus was reached by experts that certain groups of cancer patients undergoing treatment should qualify for the support group automatically. As was stated by the charity, this is because those patients are more likely than not to be debilitated by their treatment and should not be made to go through an assessment while undergoing this debilitating treatment.
	While I am not suggesting that it was the intention of the Minister and his colleagues to add to the struggles and difficulties that cancer patients experience, I fear that what is currently being proposed would do just that. In the Sunday Times this week, the journalist Jenni Russell shared her experiences of chemotherapy very movingly and said:
	"I read these proposals with incredulity. I have been seriously ill at times in my life ... but I have never felt as appalling as I did on chemo ... I had assumed I would overcome it with a bit of willpower. Instead I had vomiting, nausea, headaches, muscle weakness and an inability to tolerate bright lights. For the first four days in every fortnight's treatment, I couldn't eat, speak, read, listen to the radio or get out of bed. My white blood cell count sank so low that I needed injections to boost my bone marrow production. For the next six days I was too weak to want to walk upstairs. There was no fight left in my body; every cell was being affected and it seemed every cell was losing the will to live. Then for three days I would feel almost normal until the cycle began again".
	Jenni Russell then provided her view on how cancer patients might interpret what was being proposed by the Government in this Welfare Reform Bill. She said:
	"What people in treatment are hearing is that they will be assumed to be guilty of skiving unless they can prove otherwise. Nothing could be more demoralising to the individuals who are already having to cope with being cut open, poisoned or burnt in the hope of saving their lives".
	These are very hard-hitting comments in the Sunday Times and very difficult to read. While there are hundreds of thousands of other people who do not have the opportunity to share their experiences in the House today, I feel sure that the views expressed by Jenni would be endorsed by many cancer patients around the country.
	I noted the Minister's comments on Monday-I was disappointed that I was not here for the Question-that part of the rationale for not allowing automatic qualification for benefit is that it is important for many cancer patients to stay in work. I do not disagree with that at all. However, it seems far fetched to suggest that qualifying for the support component would stop cancer patients who wish to continue working for as long as they can from doing so. I do not understand how that holds up.
	The Minister may also argue that the automatic support group status encourages the wrong kind of behaviour in cancer patients. The Minister shakes his head; I am sure he will put me right in a moment in his very clear way. I would welcome hearing from him whether he really believes that cancer patients would decide to leave work just because they are automatically eligible for this benefit. What picture does that paint of the motivations behind cancer patients' behaviour? It is my understanding that automatic entitlement to ESA support group status would not prevent patients who wish to remain in work for as long as they are able from continuing to do so. If the Minister has any evidence that the existing exemption for cancer patients on IV chemotherapy, for example, has been or is being abused by cancer patients who are clearly capable of working, it would be very useful to hear about it. The House would welcome that.
	Nor will becoming eligible for the support component of the ESA while receiving chemotherapy lead to people spending a lifetime on benefits. I know the Government are very concerned about ensuring that we do not leave people to languish on benefits for a lifetime. I totally support that. We know that work is good for people. Even if that is what people wanted-which they do not-they are reassessed for eligibility for benefit after their treatment. This would mean that when they are no longer in need of the support on offer from the support group, it would be withdrawn. There were many personal examples given in Committee. When I was talking about PIP, I used the example of my niece who was in the process of being treated for Hodgkin's lymphoma. She is in hospital having her second transplant at the moment. Throughout her 18 months of treatment she has been reassessed three times for ESA to check whether or not she should still be receiving it in the support group. So there is no danger of her going on indefinitely in the support group.
	The amendments will ensure that the added burdens associated with seeking financial support during the most difficult of times are minimised as much as possible. This would help to remove the anxiety experienced when people have to wait for the results of a decision-maker. With 40 per cent of appeals currently successful, we should not forget that these decision-makers are clearly frequently making the wrong decisions. It is feasible that, without the guarantee of receiving the support component of the benefit, cancer patients who are in the middle of treatment could be forced to attend back-to-work interviews or even be found fit for work.
	I remain hopeful that the Minister will respond to the growing concern on this issue, which has been even more apparent over the past week. I hope he will be able to say that all patients receiving, due to receive or recovering from chemotherapy will automatically qualify for the support element of ESA. It would also be useful if the Minister could explain at this stage what further documentation and processes cancer patients receiving IV chemotherapy will have to provide and undergo in future as this would be extremely helpful in informing the debate at this point.
	I hope very much that the Minister can give me reassurances that it will not become more difficult for those who are currently automatically put into the support group because of their cancer treatment to claim ESA. I hope very much that the Minister will be able to give undertakings about the consultation process, which I believe is due to be taken forward just before Christmas-Christmas holiday time-and that the consultation period will seek the views of many on a range of options. It looks a little like the Harrington review has asked Macmillan to do some work for it, does not like what has come back, and is going to ask some different people to see whether it can find some more opinions that it does like. I am sure-absolutely sure-that this is not what the Minister is proposing at all.
	I hope that if there is to be a consultation over Christmas it will be done in a fair, open, transparent and timely way that looks at more than just one option and talks to patients, charities and a range of experts too. I beg to move.

Baroness Hayter of Kentish Town: My Lords, like the noble Baroness, Lady Morgan, I think the fact that this amendment is necessary comes as a surprise. When we started discussions of the Bill, it seemed that the issue of whether recipients of debilitating cancer treatment in the form of oral chemotherapy should be automatically exempted from requirements to look for work was being dealt with in a sensible manner by discussions between the cancer charities, cancer specialists and the Government. It is extremely disappointing to find that these discussions appear to have broken down. Disappointing for us, but extremely worrying for the many cancer patients anxious about what support they will be able to claim and how they will qualify for it when their main focus is living through and coping with some pretty debilitating-as we have heard-albeit wonderful, lifesaving treatments. The Government's response to the second Harrington review states that its new proposals to ask everyone experiencing cancer treatment to go through the work capability assessment process,
	"would increase the number of individuals being treated for cancer going into the Support Group".
	It also states that:
	"They would also reduce the number of face-to-face assessments for people being treated for cancer as most assessments could be done on a paper basis, based on evidence presented by a GP or treating healthcare professional".
	While we welcome the acceptance of medical evidence, this proposal still puts cancer patients undergoing treatment through the uncertainty and stress of not knowing whether they will qualify for essential financial support or whether they will be expected to prepare for work while undergoing their treatment. With the proposals to time limit employment and support allowance for those in the work-related activity group, these assessments take on an added importance, since for many people they will determine when the clock starts ticking to the point when they will lose this contributory support altogether.
	We do not think that anybody should be written off because they have cancer. We certainly do not think that no one with cancer will ever be able to work again. A brief glance behind me in your Lordships' House is great testimony. This is not, however, what automatic entry into the support group means. We know that those in the support group can volunteer for access to the work programme and the support there to help them get back into employment. We imagine that the vast majority of those who have overcome their cancer will want to do just that. But for the Government to suggest that those receiving chemotherapy need to be tested to see whether they are really ill enough to avoid a conditionality regime, which we will remind the House was intended to put pressure on people to return to work, suggests that the Government somehow view all cancer patients as potentially taking advantage of the state. We are sure that that is not the Minister's view and therefore hope that he will be able to accept the amendment.

Lord Freud: My Lords, this is obviously a very sensitive issue, and I want to start by saying that we are determined that the benefit system should support in a sensitive, fair and appropriate way people who are diagnosed with cancer and coping with it. I shall try to go through the argumentation here in as simple a way as I can.
	First, we know that cancer and cancer treatment affects individuals very differently. That was one thing that the Macmillan evidence demonstrated. It shows that some people can continue working straight through their treatment, are capable of doing so and want to do so. On that evidence, we believe that automatically putting everyone undergoing certain cancer treatments into the support group is not the right way forward. Clearly, there is the example that the noble Baroness raised, the one in the Sunday Times, of Jenni Murray, who had a bad reaction, and one can only sympathise with that. Everyone in this Chamber will have friends or relatives who have gone through this experience and had a bad reaction. It is always painful. We are all thinking exactly the same thing; we are all thinking of someone we know who has gone through hell on this process. But when you talk to the experts, you get examples of someone-let us take a man-who has had testicular cancer and has recovered well from curative surgery and is now being treated with radiotherapy without any significant side effects. On this ruling, he would be automatically placed in the support group. That is a kind of counter-example, which half of us should be so lucky to have.

Baroness Morgan of Drefelin: When we look at the Macmillan recommendations, we can see that they take into account that people respond in a range of ways. In the recommendations that the charity made to the Harrington review, they came up with a lot of detail, and I could read it all out. No-I will not read it all out, but I could.
	The point that I want to make is that a consensus process was gone through at the request of a government review. We could all pick out little bits of that wide range of opinion that we do not want to promote, but that was not what the charity did. It published it all, which now allows the Government to pick bits out that suit the argument. But the overall conclusion by the experts and the consensus statement was that, for the majority of cancer patients going through specific cancer treatments-and it is not all chemotherapy; we are not talking about long-term oral chemotherapy here-it is more likely than not that they would experience debilitating effects.

Lord Freud: Let me go through the argument and I will pause just before I sit down to let the noble Baroness to come back on the process. We asked Professor Harrington and Macmillan to review the current descriptors to provide evidence as to whether they could be improved, and we are committed to acting on the evidence that they put forward. The evidence provided by Macmillan showed clearly that there is no longer a basis for differentiating between certain types of cancer treatment in the way that current regulations do. The evidence showed that all types of chemotherapy, including oral chemotherapy and certain radiotherapy, can be debilitating but it also showed that there can be considerable individual variation in the impact of the treatment on each person, and that work can be very important for some individuals with cancer.
	I think that there were 16 medical professionals-the oncologists-who were consulted in depth in this evidence. I shall quote just one as an example, who said,
	"I am somewhat against the concept of including all chemotherapy",
	in the support group,
	"as it will clearly be inappropriate for some patients, risks stigmatising these patients in the workplace and may delay useful reintroduction to the workplace".
	A number of the experts consulted by Macmillan, and indeed Macmillan itself, volunteered evidence of the importance of work to an individual's rehabilitation and emotional well-being. Indeed, in a recent publication, Macmillan said:
	"Many people who are working when they are diagnosed with cancer would prefer to remain in work, or return to their job, during or after treatment".
	From this evidence, it is clear that while many people will not be able to work, some can and do. For them, it is an important part of coping with their diagnosis and treatment.
	We want the work capability assessment to effectively reflect this new evidence based on what Macmillan, supported by Professor Harrington, has found. How it would work is that each individual would be assessed on a paper basis. The evidence required might be a note from the claimant's GP or consultant, and where a claimant is unable to provide information an Atos healthcare professional will contact their GP or consultant to gather the information and ensure that they are not unnecessarily sent on a face-to-face assessment.
	We have had a request to look at this evidence more widely, so we are in the process of asking Macmillan whether we can make this document more widely available. At the moment, Macmillan is seeking permission to do that. I hope that that actual evidence becomes more widely available for consideration. We believe that our proposals meet the spirit and intent of Macmillan's assessment. If that were to be the case and we were to go ahead with those proposals-if your Lordships will bear with me, I will describe the process before we were to go ahead-there would be an increase in the number of people in the support group. About 10 per cent would move from the WRAG group to the support group, while there would be a reduction in the number of face-to-face assessments that individuals suffering from cancer would undergo.
	Let me provide another example of how this will better support people by citing a woman who is being treated via oral chemotherapy and who is profoundly fatigued due to the treatment. Her GP confirms her diagnosis and symptoms. Currently, she may be invited for a face-to-face assessment; under the new proposals, she could be placed in the support group on a paper basis.
	We are disappointed that Macmillan seems to be unable to support these proposals, which we have based on the evidence that it spent so much energy in collecting, and because we had hoped to introduce the proposals in April 2012. However, since we do not seem to have Macmillan's support at this particular moment, we will now seek a wider range of views through an informal consultation. As part of this we will seek the views of individuals affected by cancer, their families and carers, healthcare practitioners and cancer specialists, as well as representative groups and other lobby groups. We want to ensure that the benefits system treats individuals with cancer in the most sensitive way.
	I recognise the points raised today. We want to get the balance right, which is why, as a result of the evidence presented by Macmillan, we will launch the consultation on these proposals this Friday. It will be informal; it will last 12 weeks, ending on 9 March, and it will follow the advice in the government Code of Practice on Consultation. We will be looking, as I said, for a wide range of evidence, and will consider all the issues, including automatic entitlement, as well as looking at previous experience of cancer assessment in the benefit system.
	I hope that that will reassure noble Lords that there will be a proper process which will aim to come out with an answer which gets the general support of this particular community, and I hope that many of them would be a temporary part of that community. The noble Baroness is getting to her feet; I will hover.

Baroness Morgan of Drefelin: I think that the Companion says that the Minister is able to respond on Report, so it is very nice of him to hover, but he can have a rest.
	Obviously the automatic entitlement is set out in regulations; I think the powers are in the 2007 Act. It would be really helpful to understand what this paper basis will look like. Will it be possible for us to see what those regulations might look like? I cannot remember whether they are affirmative or not. I guess they probably are, but if they are not, then maybe they should be.

Lord Freud: Rather than go into detail now I would like to wait for the proper consultation. The document is coming out in two days; it will lay out the issues, the proposals and the background, and there will be a full opportunity for us to gather all those views and pull them together. With that reassurance that there is a real process going on to get agreement and to take everyone's views, I hope that the noble Baroness feels that she can withdraw her amendment.

Baroness Morgan of Drefelin: My Lords, it is very late and I have only a couple of thousand words to get through. More seriously, the Minister has given me quite a lot to think about. Obviously, as this is only the first time that we have had a proper discussion about this, I will have to look at Hansard very carefully, and think about whether I need to come back to it. However, I appreciate the time that the House has given to this issue at this late hour, and I beg leave to withdraw the amendment.
	Amendment 24 withdrawn.
	Amendment 24A not moved.
	Clause 24 : Imposition of requirements
	Amendment 25 not moved.
	Amendment 26 not moved.
	Clause 26 : Higher-level sanctions
	Amendment 27
	 Moved by Lord McKenzie of Luton
	27: Clause 26, page 12, line 41, leave out "three years" and insert "one year"

Lord McKenzie of Luton: My Lords, I will be brief on Amendments 27, 30, 31 and 29, which deal with sanctions. However, given the hour, there is just one particular point I wish to pursue.
	We have already had the assurances of the noble Lord and his colleagues that there will be no target set in respect of sanctions. That is clearly on the record in Committee. We might like one more go at it, but we need not spend any more time on that. In the other place we made the argument for reducing the maximum sanction from three years to one. Given where we are, I do not see merit in going over those arguments again; we will just have to differ on that.
	The point that I wish to pursue is the opportunity for people to mitigate that longer-term sanction. My noble friend Lady Hollis touched upon this briefly in Committee. If someone is sanctioned for three years, your leverage to encourage them closer towards the labour market is very limited. Three years is a long period of time; people change and perhaps understand the consequences of what they have done. It seemed a reasonable proposition that they should have an opportunity of mitigating and reducing that three-year period. That is the point that we wanted to pursue in this amendment. I beg to move.

Baroness Hollis of Heigham: My Lords, I strongly support my noble friend on his last point. The whole point of sanctions is not just to punish but to change behaviour. If someone does so and therefore, having learnt their lesson, is willing to comply, they should get rewarded for that, so to speak, otherwise there is no incentive for them to change their behaviour. I hope that the Minister will hear my noble friend's wise words, otherwise the sanctions regime will not work or stick-and, I suspect, will end up being judicially reviewable.

Baroness Meacher: My Lords, I shall speak extremely briefly to Amendment 28, which is in this group, but I would not wish the House to take the brevity of my remarks as an assessment of the importance that I attach to it. The amendment concerns thousands of people up and down the country with mental health problems, mental impairments and learning difficulties and would affect whether they are fairly treated or denied benefits unfairly because of misunderstandings and a failure to understand why those people have failed to comply with the conditionality requirements and then have their benefits removed or cut.
	I emphasise that it is not sufficient, as I believe the Minister said in Committee, that if a matter is drawn to the attention of the officials, they will take that matter into account. Many of these people will not be aware that they need to make that clear; they will not even necessarily have the capacity to make it clear that their disability, handicap or learning difficulty prevented them satisfying the conditionality requirements. They may indeed be lying in bed, not opening their post, not answering the phone, not responding to requests to come for an interview and so on.
	The Minister is very familiar with these issues, but I was concerned in Committee that he seemed simply to suggest that a person can point out that they have a problem. I would be interested to know whether he can assure the House that specific actions will be taken by officials to ensure that they have considered and checked whether a person has a mental health problem or a learning difficulty, and whether that has in fact affected their capacity to respond.
	The other issue in the amendment has to do with reasonable adjustments. Of course there are people who cannot get to the office and attend an interview or assessment, such as people suffering with agoraphobia. Many others are also sufficiently unwell in a mental health way that they simply will not be able to perform as others might. Reasonable adjustments have to be made for those claimants if they are going to be fairly assessed and not sanctioned unreasonably. I will be very interested to know what the Minister has to say in response to these issues.

Baroness Turner of Camden: My Lords, I would like to speak very briefly to Amendment 36, which is in this group. This relates, again, to sanctions, and is an attempt to amend Clause 46, talking about high-level sanctions, which says that it is a failure sanctionable under this section if a claimant,
	"through misconduct loses employment as an employed earner".
	Not all allegations of misconduct are accurate; sometimes the employee may claim that he is being discriminated against, or perhaps that he has blown the whistle on some unsafe practice and has not been guilty of misconduct. He therefore attempts to institute proceedings to try to demonstrate that the dismissal is unfair.
	In such circumstances it seems that it is in line with employment rights if the employee is not sanctioned under this provision, because he has disputed whether or not his dismissal was fair, and has instituted appropriate proceedings. It is quite a simple amendment, designed to protect people's employment rights, and I hope that the Minister will be prepared to look favourably upon it.

Lord Freud: My Lords, I will also try to be as brief as possible. We had a very good discussion on this area in Committee, and I can make clarifications which have been informed by some of that discussion. One of those clarifications is that we will limit the sanction amount to three years, so we will not have it compounding above that level.
	The second relates to the parable of the prodigal son. From the argument of the noble Lord, Lord McKenzie, there has got to be a way back into the system. We are trying to change behaviour: where someone has come back and got a job for six months at his job goal level, we will take away his sanctions at that point. I thank noble Lords for the very informed debate that we had.

Baroness Hollis of Heigham: Did the noble Lord say that if the person got a job, after six months in the job the sanctions would be removed?

Lord Freud: Yes.

Baroness Hollis of Heigham: I do not think that is good enough. That means that coming back in and searching for the job-in other words, conforming to the sanctioning conditions-is not enough. He also has to be successful, which will depend on the lottery of what jobs are available, and so on. I would have thought that providing he is conforming to the work conditionality regime in searching for a job, that ought to be enough. You should not be able to punish him just because he lives in Merthyr Tydfil and the jobs are not there, whereas in central London they may be.

Lord Freud: My Lords, we thought about this matter very deeply and thought that it was very hard to genuinely measure compliance if there was not a hard result. We decided that the hard result was taking a job and holding that job for six months, and then we would take away the sanctions. That is where we are. It is a lot better than where we were.

Baroness Hollis of Heigham: But if that means that he was previously on JSA and HB as part of his universal credit, and he has now gone into low-paid work, so is getting a wage, then presumably if the sanctions still apply he would fail to get the housing element going into his universal credit, and he would not have enough to live on.

Lord Freud: No, my Lords, the sanction regime does not work like that. It takes away the equivalent amount of the JSA, so you keep getting your housing credit, but have this amount taken off, which will be a proportion of the total universal credit.

Baroness Lister of Burtersett: I am sorry to interrupt the Minister, but is he saying that the department is unable to measure compliance with work-seeking requirements? If that is the case, surely the whole basis of the sanction regime falls apart?

Lord Freud: I think I can safely say that we are not saying that. We are just saying that we want real proof of a change. The prodigal son must do more than turn up and warm his hands on the fire as the fatted calf is slaughtered. I am saying that he has to take a job and hold it for a minimum of six months.

Baroness Hollis of Heigham: Could the noble Lord perhaps move from the Old Testament to the New Testament?

Lord Freud: I thought it was the New Testament. It is definitely a New Testament matter. I am shocked that the noble Baroness-

Baroness Hollis of Heigham: I was a Methodist.

Lord Freud: I am utterly shocked. Let me keep going; the hour is late and I am forgetting what I am talking about very quickly.
	Turning to Amendment 28, we will impose reasonable requirements, taking into account the claimant's particular circumstances, including any health condition or disability. Universal credit claimants with a health condition or disability that limits their capability for work will not be required to look for work. There are specific safeguards in this area. Decision-makers must consider any relevant matter raised by the claimant when considering whether there is good reason for a failure.

Baroness Meacher: That was the issue in Committee. Does it have to be raised by the claimant?

Lord Freud: When I say "by the claimant", it can be done on behalf of the claimant by someone else. There is a clear duty on decision-makers to watch out for vulnerable people. The request I am making of the noble Baroness is this: if we begin to introduce specific legislative provisions around such matters of detail, we will end up with a whole mound-

Baroness Meacher: I thank the Minister for giving way. What I am looking for is an assurance that, in regulations, the Minister will guarantee that officials will ensure for themselves that this person could perfectly reasonably comply with conditions. That is all I am looking for-an assurance.

Lord Freud: Can I leave it like this, without giving a hard commitment right now, on my feet? When we get to the regulations on this, I will look very hard at exactly what the protection is. I cannot offer any more now but I am sure we will debate this in the months to come. My main point here is that overall duties, rather than lots of specific ones, are the way to go.
	Let me turn now to Amendment 36, which proposes an exemption from the sanction for losing employment due to misconduct where the claimant disputes that the dismissal is fair and has instituted proceedings-in other words, is taking a case to an employment tribunal. First, I assure noble Lords that the decision-making process around sanctions for misconduct is rigorous and rounded. We are proposing nothing in this Bill that changes the current process. Decision-makers will take all relevant matters into account when determining whether a sanction should apply, including evidence about whether claimants have left employment through misconduct or been unfairly dismissed. If a tribunal finds that there has been no misconduct by the claimant, this will be very compelling evidence. Where a decision-maker decides that there has been no misconduct, a sanction will not be applied.
	However, we do not consider that there can be a blanket rule which says that, where a claimant has instituted proceedings for unfair dismissal, sanctions cannot be applied in that case. One of the reasons for this is that we want to avoid creating a perverse incentive for claimants to make claims to employment tribunals, which would put a burden straight on to employers for no fundamental reason. Decision-makers must have the flexibility to look at each case on its facts and to assess the strength of the evidence. I trust noble Lords will agree that this flexible, case-by-case approach is the right one.
	The final amendment, which the noble Lord touched on right at the beginning, and which seemed like a game of tiddlywinks between us, is on targets. He knows what I am going to say-his side likes targets, we do not like targets-so I will say it, as it just keeps the night going. We will continue to collect this information to support our work. We need to know how many sanctions are being imposed, but collecting information is not the same as using it to target. It helps us to assess the consistency of approach in this area and to monitor and evaluate the impact of those sanctions, so that is what we are collecting.
	On the basis of that rather rapid, somewhat biblical, summary I would ask noble Lords to withdraw or not move these amendments.

Lord McKenzie of Luton: My Lords, I thank the Minister for his reply. I thought we were going to have a quicker canter through these issues, and we may wish to return to at least one of them at Third Reading. In relation to the mitigation issue, I am obviously grateful for the Minister's consideration of that and recognition that there is an issue to address. However, like my noble friend, I am a bit dismayed that the route to dealing with it is the six months-

Baroness Anelay of St Johns: My Lords, I know that we are in a cordial mood and we have reached a magical moment as far as noble Lords and perhaps the staff, too, are concerned. As Government Chief Whip, I ought gently to remind the noble Lord, who was a Minister himself with distinction, that Third Reading rules are very carefully framed by this House and I know he would not wish to breach them. There are matters which may very properly be brought back at Third Reading. I know that he will consider whether any wish he expresses now to bring back at Third Reading will later be translated into action only within the rules.

Lord McKenzie of Luton: Indeed, my Lords. We aspire to do nothing but stay within the rules. We would not dream of treading outside of them.
	It is disappointing, for the reason my noble friend gave, that if the idea is to get somebody to re-engage, it must surely be possible to evaluate prior to them actually getting into work. After they have been in work for six months, it may be that there is frankly not a lot to sanction in any event. It depends on the level of earnings and the impact of universal credit on that. I would urge the Minister to reflect and think again on this point. We have had our exchange on targets and I understand that the data are still going to be collected. I trust they are not going to be posted on office notice boards to act as an indirect incentive. I accept the Minister's assurance on that.
	The noble Baroness, Lady Meacher, made a very important point which has not, I think, been fully addressed. In summary, she is seeking a requirement for the department to be proactive with people before they are sanctioned, not just relying on them to respond, question and challenge.
	My noble friend Lady Turner's amendment raises an interesting point. If the decision maker is going to make an up-front judgment as to whether there has been misconduct by an individual who has left work or whose employment has been terminated, this might pre-empt the role of the tribunal itself, whose job it is to make that assessment.
	I am not sure how that sits four-square but, given the hour, I would urge the Minister to reconsider the first item in relation to mitigation. I am sure we will all be happy if we can avoid Third Reading and a possible challenge from the noble Lords' Chief Whip. I beg leave to withdraw the amendment.
	Amendment 27 withdrawn.
	Amendment 28 not moved.
	Clause 27 : Other sanctions
	Amendments 29 to 31 not moved.
	Motion
	 Moved by Lord De Mauley
	That further consideration on Report be now adjourned

Lord McKenzie of Luton: My Lords, we were happy to try and continue a bit further to reach the target amendment. My noble friends are nodding in agreement. Perhaps it is not too late.

Baroness Anelay of St Johns: My Lords, I know that it is unusual for the noble Lord to put such a matter. I certainly am content to accept that offer, but I do not wish in any way to make the House feel that it is being overworked. I am looking carefully at the opposition Front Bench and I see the noble Lord, Lord McAvoy, giving his consent. Perhaps I may check with my noble friend the Minister. We are all aware of the other side of the coin of that offer, to which I have no objection whatever. It is a perfectly normal way for an Opposition to behave and I certainly recognise it as such. It is a generous offer met in generous spirit. Perhaps we may continue.

Lord De Mauley: I beg leave to withdraw my Motion to adjourn further consideration on Report.

Motion withdrawn.
	Schedule 1 : Universal credit: supplementary regulation-making powers
	Amendment 32
	 Moved by Baroness Donaghy
	32: Schedule 1, page 111, line 20, at end insert ", where the Secretary of State has reason to believe that a claimant has deprived himself or herself of income for the purpose of securing entitlement to universal credit"

Baroness Donaghy: My Lords, the amendment was in the first grouping on the first day of Report, when we were all bright-eyed and bushy-tailed. I asked for this to be degrouped, and I therefore accept my punishment with good grace.
	I asked for the amendment to be degrouped because the issue of self-employed people is extremely important and deserves a slot on its own. The purpose of the amendment is to recognise the particular needs of the self-employed. It will ensure that the power to prescribe a minimum level of income applies only to those self-employed claimants if they under-declare their earned income with a view to maximising their entitlement to universal credit.
	While it is important to prevent abuse of the system, it is equally important not to discourage the genuine self-employed claimant with a potentially viable business in the early stages of development or in financial difficulty. There are some 4 million self-employed people in the UK and that number is likely to grow as employment becomes more difficult. They are an enormously varied group who face a greater degree of risk than traditional employees. Profits are affected by any number of events-the loss of a key customer, the sickness of the sole proprietor, a bad debt, the accumulation of slow payers, or even taking on a new employee.
	The measurement of self-employed income for universal credit purposes should follow generally accepted accountancy principles and aim at a true and fair view of a business's profits. The welfare system needs to support business through such periods, not discourage them by imposing unrealistic levels of deemed income such as the minimum income floor. My amendment recognises that real abuse should be directly targeted. If you impose a minimum income floor for each hour worked, that in itself will open the floodgates for abuse. That view is supported by the National Farmers' Union, the Tenant Farmers' Association and the Federation of Small Businesses, as well as Community Link, Citizens Advice and the Child Poverty Action Group.
	There are those with a disability or medical condition which makes it difficult for them to take traditional employment. Indeed, it is often difficult for the disabled to find employment. Being self-employed allows the disabled to work at their own pace and according to a pattern which suits their circumstances.
	What steps are the Government taking to minimise the compliance burden on the self-employed? The current system requires only one set of accounts to be prepared, which is accepted for both tax and tax credits. That allows the individual to get on with running their business. If a different measure of self-employed income were to apply for universal credit, the burden would be increased by having to assess profits for tax purposes according to one measure; and income for universal credit purposes according to another, quite different measure. If income is to be based on reported hours, the harder a self-employed individual works to get their business on its feet, the more they could lose from their universal credit entitlement.
	It would be unfortunate if the measure were to put off genuine claimants from taking the risks inherent in self-employment, when its purpose was to deter a minority from underdeclaring their profits. One real example, which I gave in Committee, was of an arable farmer whose crop was completely destroyed. I was going to give another detailed example of livestock farmers who could not move them if they were under BTB restrictions, but in view of the hour, I will not.
	There are already regulatory powers to counteract moves by claimants to underdeclare their income for tax credit. For benefit purposes, under the income deprivation rules, a person is deemed still to have income of which they have divested themselves to maximise their claim to benefit or tax credit. Where the Government perceive that abuse, surely the right course is to enforce existing powers rather than to invent new ones which will discourage genuine cases.
	This brings me to a group who are in practically every sense of the word employees, but where individuals are treated as self-employed because the alternative is no job at all. They are often referred to as bogus self-employed. The Government's difficulty in drawing up criteria to deal with the genuine self-employed may be alleviated by proper enforcement of the tax laws by HMRC and employment laws by the BIS department, with all the resources that that implies. It also means a greatly increased level of interdepartmental co-operation in Whitehall.
	As I said earlier, self-employment entails a greater risk than traditional employment. The self-employed must often choose between taking drawings for themselves or reinvesting in the business to enable it to grow. Welfare policy must reflect those different needs if it is to succeed in promoting work through self-employment. The success of working tax credit in encouraging work and, in particular, self-employment, rests on its recognition, in alignment with the tax system, of the economic reality of how a business is doing-particularly with regard to investment in business equipment and trading losses. Will the Minister indicate what guidelines will be issued and when? I ask him to accept my amendment, which aims at the real target, rather than those struggling to survive in these deeply difficult times. I beg to move.

Lord McKenzie of Luton: My Lords, my noble friend Lady Donaghy has made a very strong case, and I look forward to the Minister's response. What she said warmed the cockles of my heart. She referred to generally accepted accounting principles-the true and fair view-and it took me back to another life, but she raises a real issue: rather than having artificial rules for assessing what people are deemed to earn, is it not better to try to capture the actual profits and to target resources on those who seek to abuse the position? That seems a very straightforward matter.
	My noble friend raises once more, as she did in Committee, the matter of bogus self-employment. We all know that that is a continuing issue. I have always believed that it rests particularly with HMRC, together with BIS and other departments of government, to make progress on that. It is primarily HMRC that could begin to make a real difference. She wrote reports for the Government, as did the Minister, on the construction sector, and health and safety in particular. There is bogus self-employment in that sector, so she is an expert on that matter. We support the thrust of her amendment.

Lord Freud: My Lords, when we discussed a similar amendment to this in Grand Committee, I explained that we intend to retain the existing practice in the benefit system whereby claimants can be treated as having income or capital in cases of deliberate deprivation. However, we believe that different issues arise in relation to self-employment. We think that it is right in principle to apply a minimum income floor to claimants who choose to be self-employed but whose earnings do not make them financially self-sufficient. I confirmed in Committee that the floor will not be based on the hours claimants work. We assume that claimants' earnings are at a level that we would expect from claimants with similar circumstances in employed work.
	Claimants will not be forced to take reduced benefit payments by accepting the minimum income floor. Self-employed claimants will have the choice in universal credit. Some will choose to continue solely with their existing activity with the expectation of increasing their earnings. They will accept the minimum income floor. Those who do not will need to satisfy conditionality requirements. The conditionality regime will aim to guide the claimant towards the most appropriate form of gainful work. For some claimants, this would combine their self-employed activity with part-time employed work. In other situations, the regime may very well encourage the self-employed to keep going in their self-employed efforts. We will need to build a quite sophisticated regime to manage this.
	This approach differs from tax credits, which allow claimants to receive maximum support so long as they declare that they are working a minimum number of hours. However, in 2009-10, for example, around 60,000 of the households claiming tax credits that received some or all of their earnings from self-employment declared earnings of under £2,500 a year-less than £50 a week. While this is legitimate under current rules, we believe that some intervention to guide claimants towards increasing their income is justified in return for state support.

Baroness Hollis of Heigham: Can the Minister explain what he expects here? The old enterprise allowance scheme, which was very effective, used to give people a top-up of £40 a week to start a business, and as far as I recall this ran for up to two years to give people a chance to establish a small business. How long will someone be allowed to have low earnings while they try to build up a business, and how quickly will guidance from young people in Jobcentre Plus, who frankly have never tried to start a business, steer them back into sanction and conditionality?

Lord Freud: I do not automatically think that we will use the example of young people in Jobcentre Plus to deal with some of the more complicated issues here. We acknowledge that the real issue is that we need to create an environment that encourages entrepreneurship. We need to balance the exact rules about the interrelationship between the new enterprise allowance and the time that we will allow. I do not have the exact figures yet, as we are still currently elaborating them. We are looking through all the details of employment earnings. Clearly, the HMRC is expert in this area and we are working closely with it to develop our proposals. I must say to the noble Lord who said that it was a straightforward matter that on that basis he can come and help us to do it.
	We are aiming to get the reporting requirements aligned as closely as possible with the tax system. However, in our view, it is reasonable for claimants to provide clear information on their income in return for state support. We are looking at a number of rules within the current benefit and tax credit systems to see what the most appropriate approach is for universal credit. We will then prepare regulations that will set out clearly the way in which earnings from self-employment will be assessed. This House will have the opportunity to debate those regulations in due course, and I think that that will be a fascinating discussion.
	In today's debate we should focus on principles. We clearly need to avoid requirements that will add unnecessary burdens, especially for people who are starting out in business-the people whom we really want to encourage. However, we cannot have a situation where people can be treated as being in full-time work for conditionality purposes, but because they declare no earnings they receive as much benefit as though they were not working at all. That is taking it to the absolute extreme. I hope that this explains why the Government cannot support Amendment 32 and that the noble Baroness will feel able to withdraw it. I know that we will be discussing this area again.

Baroness Donaghy: I thank the Minister for that response, and I look forward to seeing the regulations. However, I still have a concern and refer again to my example of a farmer who cannot move his livestock and is therefore getting no income. He is having to work harder than ever but will not be able to get a part-time job.

Lord Freud: My Lords, I forgot to say something. There are two areas where we need to get really smart. One is the start-up period and the other is when a business hits a problem. The questions there are how long the process should be and what one allows. That is another area that we are actively looking at.

Baroness Donaghy: I am reassured by that. I certainly agree with the Minister that this is a very complex area and, as I said in moving the amendment, it involves a very varied set of problems. I look forward to seeing the regulations and beg leave to withdraw the amendment.
	Amendment 32 withdrawn.
	Amendment 32A
	 Moved by Baroness Hollins
	32A: After Clause 33, insert the following new Clause-
	"Criminal injuries compensation
	For the purpose of this Part, a claimant in receipt of criminal injuries compensation, whether or not this is held in trust, will not have this amount included in the prescribed capital sum in section 3."

Baroness Hollins: My Lords, in speaking to the two amendments in this group, I want to mention a personal interest in the issue that I shall be talking about, as some years ago a member of my family was affected by it.
	As noble Lords know, the capital of a claimant is taken into account when assessing the level of benefit to be received. If the amount of capital is greater than a prescribed amount-I think it is currently £16,000-then the person's benefits are adjusted accordingly. There are several exceptions to what is counted as capital and these include any funds held in trust. This is clearly outlined in the 2009 Housing Benefit/Council Tax Benefit Guidance Manual, which states that certain types of capital should be disregarded in full, including the value of any funds held in trust and the value of the right to receive any payment under that trust following payments made to the claimant as a result of a personal injury, such as vaccine damage payments or criminal injury compensation. The value of these funds is not taken into account when calculating the capital of the claimant. Therefore, any payment made into the trust as a result of a personal injury, such as criminal injuries compensation, will not count when the claimant's benefits are considered.
	These amendments seek to apply the principle that claimants who have received criminal injuries compensation should not lose benefits, regardless of the form in which it is received or kept. A year later, the 2010 Housing Benefit/Council Tax Benefit Guidance Manual states that officials should treat lump sum compensation payments as capital. Examples given include lump payments, such as those made by the Criminal Injuries Compensation Authority. However, the manual then reminds officials to disregard the value of any compensation payment for personal injury which is held in trust. I believe that criminal injury compensation payments should not be considered as capital at all when assessing the levels of benefit, regardless of whether this is a £1,000 payment for 12 weeks of blurred vision or the maximum of £500,000 which is paid out for injuries leading to indefinite loss of earnings. Recipients of larger sums are likely to put this into a trust, but recipients of smaller sums are not. They may intend to use it for a holiday-some recompense for the injury that they suffered. One of the purposes of criminal injury compensation is to give recipients the opportunity to improve their quality of life after their trauma.
	These amendments would benefit some victims of crime, particularly people with mental health problems or learning difficulties. Not only are they more likely to be in receipt of benefits, they are also more susceptible to being victims of crime. The benefits that they receive are provided to cover essential costs, and any payments made as criminal injuries compensation are made in recognition of pain and suffering that the victim has gone through and perhaps for the purpose of making up any lost earnings.
	The idea that the benefits that the person is receiving and the criminal injuries compensation provide for two distinct purposes is very important. It is for this reason that allowing one to influence the level of the other would be unfair. The Minister may consider that Clause 5 would have been a better place for these amendments. I hope that he will accept these amendments or undertake to bring them back at Third Reading in a more appropriate form. I hope he will reassure me that these simple amendments would be acceptable. I beg to move.

Baroness Hollis of Heigham: My Lords, I strongly support the amendment. I had the privilege many years ago of being responsible for vaccine damage payments within the department and always tried to make a distinction between payments that were in lieu of earnings, which tended be of the incapacity benefit sort, and payments which were a lump sum. Sometimes there was a structured payment of capital over a period of time as compensation for suffering and injury as opposed to an earnings replacement. We always excluded that second element from coming within the debiting of benefit. That distinction has been well drawn by the noble Baroness, Lady Hollins.
	I hope that the Minister can respect the ethics as well as the long history of making a distinction between getting an income replacement benefit-ESA for example-and getting an element of compensation for damages, for suffering, for pain and so on. In my understanding that has always been protected and has not been debited against your rent. Otherwise it is not worth anything to you at all. That was never the intention of the law. I hope that the Minister can support the proposals of the noble Baroness, Lady Hollins.

Lord McKenzie of Luton: My Lords, the noble Baroness has brought an important point to our attention. I have only two questions for the Minister. Can he explain the extent to which the current rules are going to be translated and taken up in universal credit? The position at the moment is that the compensation recovery scheme does not apply to criminal injuries compensation. Can the Minister say whether that would continue under universal credit?

Lord Freud: My Lords, Amendments 32A and 34A seek to use primary legislation to exclude criminal injuries compensation from the capital test for universal credit. The existing benefit system does not have a specific disregard for criminal injuries compensation. However, such payments will usually fall under the rules governing personal injury payments where they relate to physical or psychological injuries suffered by the claimant. As indicated in the illustrative draft regulations on capital and income, shared with noble Lords in September, we intend to replicate these personal injury payment provisions in the universal credit regulations. I hope that that answers the question of the noble Lord, Lord McKenzie.
	Personal injury payments are disregarded in the current benefit system for a period of 52 weeks from the date that they are paid. Even after that period, remaining capital will continue to be disregarded if it is placed in a trust, as the noble Baroness, Lady Hollins, indicated. This rule allows us to distinguish the personal injuries payment from other savings. If the payment is not separated by placing it into a trust, it becomes increasingly difficult to identify the source of the capital as time goes by. Ultimately, any capital test must consider the balance in a claimant's account, and over time it becomes impossible to say whether it is from one source or another, unless it is held in a different form. That is the reason for the way that this is structured.
	The current arrangements are long-standing, and we are not aware of significant practical problems with their use. In any case, the details of capital disregards are a matter we will address in the universal credit regulations. If there are particular problems, we will have a further opportunity to consider them when drafting regulations, and I will bear in mind the points the noble Baroness has made.
	In answer to the question asked by the noble Lord, Lord McKenzie, I agree that the compensation recovery scheme does not apply to criminal injuries compensation.
	I hope I have made clear why the Government cannot support Amendments 32A and 34A. I hope the noble Baroness will withdraw her amendment.

Baroness Hollins: Given the lateness of the hour, I will withdraw my amendment. I will study very carefully what the Minister said to make sure that I understand it. I think what he is basically saying is that it should be possible to protect that capital for 52 weeks, and I understand the point, but it is a little bit more complicated than that. I beg leave to withdraw the amendment.
	Amendment 32A withdrawn.

Lord De Mauley: My Lords, let me try again: I beg to move that further consideration on Report be now adjourned.
	Consideration on Report adjourned.

House adjourned at 11.12 pm.